[chassis]

@zx10guy you see demand rising. Do you also see supply rising? I haven’t seen it, until 2018 or 2019, and then only slowly. Principal dwelling singe family homes have been under built since the GFC. Today is the perfect storm if you earn a living selling principal dwelling single family homes.

Demand will even out because it’s tied to population growth. Interest rates won’t change the fact that people need a roof over their heads.

Supply in term of home construction needs to accelerate, I see this as a major factor explaining today’s prices. Supply.

[chassis]

Originally Posted by vreihen16

I'm thinking that someone's post here in another thread describes the next year of the RE market. The government moratorium on evictions/foreclosures due to COVID is about to expire, and banks have piles of paperwork waiting to be filed as soon as the moratorium expires.

As the mask mandates wind down, so does housing demand in our region from city people looking to flee the COVID plague in the city.

As the foreclosures hit the market, the housing supply will increase significantly.

Decreased demand combined with increased supply. The rest is left as an exercise for the reader.....

vreihen16 do you have a favorite data point, statistic or KPI for foreclosures and evictions?

[6oclockshadow]

Depends on the region and even micro region. Things slowed a bit in Boston metro during 2007-2009, but by no means crashed or even came close-there were buys if you looked hard enough and were willing to do some reno work. I may be wrong, but I think the extreme coasts have always been isolated from major RE crashes. Prices have gone up 6-8% every year since 2009, and I don't see that turning around anytime soon. Good time to sell (and relocate to a much lower cost market) horrible time to buy.

[TheWatchGuy]

Originally Posted by zx10guy

Maybe someone can explain this to me. I get that housing demand has been increasing over the years which has driven up prices. What I don't get is this overnight boom that's to me artificially driving up prices to bubble levels. I've heard everything from low interest rates and pent up demand causing the huge demand. Well, what good is low interest rates if you're losing that savings by paying above what is "reasonable" market for a home. Then the huge demand. People were living in homes before this run up. I don't see a mass of homeless people all of sudden getting financially healthy that is significantly adding to the pool of buyers. I heard financial institutions are playing into this frenzy by buying up real estate. I'd like to know how big a percentage it is.

This is all the same in my eyes as the craziness going on in new and used car sales. It seems people just flushed any common sense they had down the toilet.

Here is a classic example of this irrational behavior:

https://www.washingtonian.com/2021/0...ing-88-offers/

Demand has been steadily rising while supply, especially in covid, took a huge hit.

Add the low interest rates, and many who have been renting for years are now able to "afford" to buy houses. Its why the entry level market is so cut throat. Most areas if you dont offer above ask and remove contigencies, your offer gets laughed out in the entry level price points.

Its also geographical. The places where people are wanting to move to are seeing a massive upswing in home prices, where less desirable places arent. Pricing in Cheyenne Wyoming have stayed flat over the last year where as Denver has seen a 10% increase over the same time.

Places are also seeing a lack of land to build new homes. as this land becomes scarce, price of land goes up, which also affects the overall house price.

[Hivand_M]

I think the market will adjust if not cool down for sure. ALOT of people got "free" money during the pandemic (PPP, SBA, etc.). Most of which will be forgivable sadly. Don't mean that for the the people who actually needed these loans but for the people that just milked the system. This gave all those people that had the income but no savings a down payment now to go and buy 1-3 properties.

[dscabra]

I purchased my first home in October of 1995 in an older neighborhood of small homes (700-1500 sq. ft.). The home I bought was 1200 sq. ft. and was in decent shape, but needed a lot of TLC to make it nice. I paid $94.5k for the house. That same house today has an estimated value, according to Zillow, of $415k. This is what the market has been like in Colorado over the past 26 years I've lived here with the exception of the recession. That happened right after we bought our current home, and has been the only time I've seen values decrease in this area.

[vreihen16]

Originally Posted by chassis

vreihen16 do you have a favorite data point, statistic or KPI for foreclosures and evictions?

I'm not really a numbers-type person, just someone who doesn't want to be without a chair when the music stops playing.

We are supposedly living in the hottest real estate market in the nation right now (NY Hudson Valley), with the market being driven insanely high by city people looking to escape COVID.

I'm starting to think that the market is at bubble-level here today. My DW is helping our elderly neighbors down the street show/sell their house, and it has been listed with an agent that I trust for over a week with 8 showings and zero offers. Certainly not the bidding war that I was expecting, with it being the only house for sale in our entire town right now. Like I feared, the panic stopped once the mask mandates ended.....

[zx10guy]

Originally Posted by chassis

@zx10guy you see demand rising. Do you also see supply rising? I haven’t seen it, until 2018 or 2019, and then only slowly. Principal dwelling singe family homes have been under built since the GFC. Today is the perfect storm if you earn a living selling principal dwelling single family homes.

Demand will even out because it’s tied to population growth. Interest rates won’t change the fact that people need a roof over their heads.

Supply in term of home construction needs to accelerate, I see this as a major factor explaining today’s prices. Supply.

Yes, demand is rising. But I think it's fueled by irrational exuberance. Yes, supply hasn't kept up with demand over the years. But you haven't explained why in one year, all these buyers just woke up and had to jump in now to get a home. These people are living some place WITH roof over their heads. Per my post, I don't see any of these new buyers being from the pool of homeless people that NEED a roof over their heads. Certainly, the demand in previous years doesn't justify the double digit acceleration we're seeing now that literally has happened overnight.

[dreamingat30fps]

Originally Posted by zx10guy

Yes, demand is rising. But I think it's fueled by irrational exuberance. Yes, supply hasn't kept up with demand over the years. But you haven't explained why in one year, all these buyers just woke up and had to jump in now to get a home. These people are living some place WITH roof over their heads. Per my post, I don't see any of these new buyers being from the pool of homeless people that NEED a roof over their heads. Certainly, the demand in previous years doesn't justify the double digit acceleration we're seeing now that literally has happened overnight.

This. My house went from $200k in 2011 to worth around $350k in 2020 so like $150k increase over NINE years. Now it went from $350k in 2020 to like $500k in 2021! Plus I heard another in my community sold for $600k! That the same increase it had over nine years in just ONE year or less!

[TheWatchGuy]

Originally Posted by zx10guy

Yes, demand is rising. But I think it's fueled by irrational exuberance. Yes, supply hasn't kept up with demand over the years. But you haven't explained why in one year, all these buyers just woke up and had to jump in now to get a home. These people are living some place WITH roof over their heads. Per my post, I don't see any of these new buyers being from the pool of homeless people that NEED a roof over their heads. Certainly, the demand in previous years doesn't justify the double digit acceleration we're seeing now that literally has happened overnight.

Theres a ton of factors influencing the housing market skyrocketing over the last year.

Residential construction of new single family homes was down in 2020 due to the pandemic and shutdowns. That affected an already low amount of supply. Once they got back to building, material/labor prices skyrocketed which led to an increase in pricing on new homes.

Home sales in 2020 also dropped to the lowest amount since 2010 while everyone was unsure of what would happen with the pandemic. This affects how many people are currently looking for homes. Its not that they no longer needed/wanted to buy a house during this time, they just put off the purchase until there was more stability.

Then you add in the stock market's and crypto's performance over the last year coupled with low interest rates, and there are more people that can afford to buy a home.

And you add all that together with people that are seeing the market surge, and are moving up plans to buy houses now instead of later so they dont get completely priced out of the market later.

This all created a perfect storm of an increased number of people now looking for homes and a decreased number of available homes which led to a sellers market and a huge increase in home prices.

Now, home sales are down in the last couple months from earlier this year, but we are still above pre pandemic levels as inventory is still low and pricing has skyrocketed. As pricing comes down though, you will have sales rebound. I personally dont see prices will come crashing down to pre pandemic levels though, as we already see home sales starting to level out as pricing has taken a small dip and new homes construction has increased. I agree, it sure seems like its a bubble waiting to pop, but that has been said for the last 5+ years and it hasnt happened yet as prices have continued to soar in many places.

My house for example was bought in summer 2017 for 400k, summer 2018 refinanced and appraised for 550k, winter 2019/2020 neighbor sold their house for 750k (comparable house), summer 2020 refinanced and appraised at 760k and spring 2021 neighbor sold their house for 850k (comparable house). I am in a more rural area of northern colorado, but the town itself has increased from a population of 20k in 2017 to over 30k in 2021. And colorado's market has typically always been a sellers market for the last decade plus.

[Alfisti]

I lost a ton of sleep 10 years ago paying $850K, house just sold next to us, very comparable, for $2,2M.

Bonkers.

[Gregrobin]

It's definitely nice to see our home values increasing. However, unless we sell it's not realized. And if we sell we have to buy back at these insane prices. Unless you have a 2nd house to sell, it's really just virtual money IMHO.

It's the same for the used boat market. I have been trying to buy my next boat since just before COVID. The prices have doubled in some cases. The same year/make/model that I sold pre COVID for $80K is now listing for $140K. Boats I looked at pre COVID listed for $50K are now listed over $100k, and selling, quickly. I have also been trying to purchase a waterfront property since pre COVID. They sell in hours, above asking, no inspection, no appraisal, for cash. Last year brokers told me to wait until this year. Well, this year they are saying the same.

Buyers think they can buy more, pay more, because rates are so low. Illogical nonsense IMHO. You are not buying a loan/interest rate, you are buying a home, a boat, etc.

I do not know where, when or if this ends. History tells us it will, though we have never lived thru a pandemic like this, at least not in my 55 years on this earth :-)

[zx10guy]

Originally Posted by Gregrobin

It's definitely nice to see our home values increasing. However, unless we sell it's not realized. And if we sell we have to buy back at these insane prices. Unless you have a 2nd house to sell, it's really just virtual money IMHO.

It's the same for the used boat market. I have been trying to buy my next boat since just before COVID. The prices have doubled in some cases. The same year/make/model that I sold pre COVID for $80K is now listing for $140K. Boats I looked at pre COVID listed for $50K are now listed over $100k, and selling, quickly. I have also been trying to purchase a waterfront property since pre COVID. They sell in hours, above asking, no inspection, no appraisal, for cash. Last year brokers told me to wait until this year. Well, this year they are saying the same.

Buyers think they can buy more, pay more, because rates are so low. Illogical nonsense IMHO. You are not buying a loan/interest rate, you are buying a home, a boat, etc.

I do not know where, when or if this ends. History tells us it will, though we have never lived thru a pandemic like this, at least not in my 55 years on this earth :-)

There's actually some fall out from all these crazy price run ups even if you're not in the market to sell your current home. That's property tax assessments. I don't plan to sell either of my homes any time soon. So I could care less if the paper value of the homes go up. But I'm sure my property taxes are going to go up in the near term when they're recalculated to adjust for this crazy run up.

People are just not thinking and are just getting wrapped up in this frenzy. It's the same going on with car sales.

On your other topic, I guess I timed the market with buying my boat back in November. It's nothing fancy and is pretty old. But my boat is in very good shape for its age and the key part is it is sail worthy and didn't require any immediate work. I was able to negotiate the price down a couple thousand. Can't imagine what my boat would go for now.

[zx10guy]

Originally Posted by TheWatchGuy

Theres a ton of factors influencing the housing market skyrocketing over the last year.

Residential construction of new single family homes was down in 2020 due to the pandemic and shutdowns. That affected an already low amount of supply. Once they got back to building, material/labor prices skyrocketed which led to an increase in pricing on new homes.

Home sales in 2020 also dropped to the lowest amount since 2010 while everyone was unsure of what would happen with the pandemic. This affects how many people are currently looking for homes. Its not that they no longer needed/wanted to buy a house during this time, they just put off the purchase until there was more stability.

Then you add in the stock market's and crypto's performance over the last year coupled with low interest rates, and there are more people that can afford to buy a home.

And you add all that together with people that are seeing the market surge, and are moving up plans to buy houses now instead of later so they dont get completely priced out of the market later.

This all created a perfect storm of an increased number of people now looking for homes and a decreased number of available homes which led to a sellers market and a huge increase in home prices.

Now, home sales are down in the last couple months from earlier this year, but we are still above pre pandemic levels as inventory is still low and pricing has skyrocketed. As pricing comes down though, you will have sales rebound. I personally dont see prices will come crashing down to pre pandemic levels though, as we already see home sales starting to level out as pricing has taken a small dip and new homes construction has increased. I agree, it sure seems like its a bubble waiting to pop, but that has been said for the last 5+ years and it hasnt happened yet as prices have continued to soar in many places.

My house for example was bought in summer 2017 for 400k, summer 2018 refinanced and appraised for 550k, winter 2019/2020 neighbor sold their house for 750k (comparable house), summer 2020 refinanced and appraised at 760k and spring 2021 neighbor sold their house for 850k (comparable house). I am in a more rural area of northern colorado, but the town itself has increased from a population of 20k in 2017 to over 30k in 2021. And colorado's market has typically always been a sellers market for the last decade plus.

I understand what you're saying. But as I said, people are living some place now and then. It's not as if they're homeless trying to put a roof over their heads. Even with the stock market surge, to me it's a bit nutty to take those gains and flush it down the toilet with adding to the frenzied bidding. To me it's as if everyone just decided to shut their brains off.

As to the predictions of a bubble that's been going on for the past few years, none of that was based on this crazy run up we're seeing that has never happened in the history of the housing market.

[Alfisti]

It's investors man, that's pretty clear. There's no return on interest so they buy houses.

This is not tricky.

[zx10guy]

That's what I mentioned in one of my replies above. I've heard of investors/institutional investors getting involved in this run up. I'd like to know how big of a percentage of homes being purchased are due to people that don't have any intention of living in them.

[Alfisti]

It doesn't take much, one extra interested party per home will push prices aggressively.

[b4hand]

Originally Posted by zx10guy

That's what I mentioned in one of my replies above. I've heard of investors/institutional investors getting involved in this run up. I'd like to know how big of a percentage of homes being purchased are due to people that don't have any intention of living in them.

From what I have been seeing, it is a lot. The potential 10yr return on buying a house, even overvalued, and renting it, is more than a 10yr bond. IMO it's not going to settle until the Fed stops propping up the market. They need to stop buying bonds and raise interest rates, until then, it's free money for Hedge funds and the like to continue to move wealth to real estate.

[RelaxIN2]

Hey guys... kind of along this thought process, I want to get your opinion on something from an investment strategy.

I currently own my home, I have no debt with the exception of my cable bill (which I will soon be cutting the cord on that too)... My house, cars, motorcycles, etc is all paid in full. I currently have a HELOC available credit line of $140k at prime plus 0. The HELOC is set to expire in 3/2022...

Originally I wanted to use the HELOC line to invest in some flips as I have in the past, however, given the state of the housing market, and the limited funds of $140k for 12 months, I'm re-thinking my options and possibly closing out the existing HELOC and applying for another line of credit.

The reason being is because... Now the house is paid for, (where it wasn't when I initially open the HELOC) and, the house is worth more because of the housing market at this time.

My goal this year is to significantly invest 2/3rds of my cash into some type of investments.

Let me know your thoughts on the HELOC idea...? Thanks guys..

[kscarrol]

Originally Posted by zx10guy

On your other topic, I guess I timed the market with buying my boat back in November. It's nothing fancy and is pretty old. But my boat is in very good shape for its age and the key part is it is sail worthy and didn't require any immediate work. I was able to negotiate the price down a couple thousand. Can't imagine what my boat would go for now.

Two happiest days in a man's life...

[zx10guy]

Originally Posted by b4hand

From what I have been seeing, it is a lot. The potential 10yr return on buying a house, even overvalued, and renting it, is more than a 10yr bond. IMO it's not going to settle until the Fed stops propping up the market. They need to stop buying bonds and raise interest rates, until then, it's free money for Hedge funds and the like to continue to move wealth to real estate.

This makes more sense as to what is contributing to this frenzy. In my opinion, regular home buyers feeding into it doesn't help the situation nor does the current monetary policy as you've mentioned. Classic case of not really thinking through consequences of cheap money.

[zx10guy]

Originally Posted by kscarrol

Two happiest days in a man's life...

Yep. I've had my moments already. LOL. But so far the experiences I've had have been worth the money spent. Good thing is I didn't go new or near new for my boat purchase. So it's really not all that bad. My motorcycle hobby has been more expensive by a wide margin thus far.