OT: Housing market
Not sure how many MGoMembers are currently buying or selling but...holy cow. Apparently inventory is down over 50% from last year and it's insanely competitive. What's your experience like right now? Anyone thinking of just selling and renting for a little while and figuring things out later?
On a related note, I'm wondering how the heck builders are dealing with these lumber costs if they have fixed price contracts. Eesh. Lumber futures are going bananas. Seems like a catch 22 - we need more new builds and new inventory but the lumber prices are so high it seems like it'd be hard to get some of the homes to appraise.
I'd like to buy a house, could sell mine for just under 150% of what I paid for mine back in 2015, but don't want to pay 150% over the value of our next home to just get burnt in 10 years.
My current home is a starter home that is usually sold prior to even being listed. It's nuts out there.
all of this. we could sell our house for 2.5x what we paid, but not looking to be "homeless" while looking for a new house.
neighborhoods around us usually have houses from mid 300's to mid 400's, and we when "window shop" he see houses in the same neighborhoods starting at 390 and upwards of 550k.
don't want to pay 150% over the value of our next home to just get burnt in 10 years.
I'm not sure you'll see that big of a price correction over 10 years. In fact, I'm not sure there's ever going to be a big correction in most places. By and large, if you hold on to a house long enough, you'll do OK on it when you finally sell.
I think the bigger problem right now is that the supply is just limited.
Sold ours for 150% over what we paid and bought a new home. But it got us back to the mitten state, so it was worth it (plus a larger home when you factor the finished basement).
If you only own one home and you live in it then the state of the housing market means nothing beyond property tax and possible refinancing. If you were to get a good deal selling your house you'd get a bad deal buying the next. If you were to get a good deal buying a house you'd get a bad deal selling yours.
I've never understood why people get excited when the value of their home goes up...You're not going to sell it regardless of it's value, and if you did, you'd spend all that 'extra value' on the next house which has also had it's value go up.
HAHAHA little do you realize that I am moving into a treehouse that I built when I was a kid! I sold my place for exactly $250k more than I paid so there will be no taxes. I even went FSBO so I didn’t have to pay those blood-sucking realtors. I’m currently stealing WiFi from a neighbor while I am comfortably lounging in my tree with about $700k in folding cash to keep me warm. NEVER assume the consumer/seller are rational!
Is this MeanJoe's burner account?
Well, it's a positive if you're selling a deceased parent's home or if you're sharply downsizing due the nest becoming empty of the kids.
Eh, not really. That holds true if you buy the house across the street but not if you move to new markets and there's jobs out there to facilitate that. Or retirement. Markets are local and while the market is hot nationally, it's plenty easy for people to cash out and move somewhere cheaper even though that market may be experiencing a similar % increase prices are much lower in dollars. E.g. San Francisco ($1.1MM) people move to San Diego ($700M) who move to Seattle ($600M) who go to Denver ($500M) who go to Salt Lake City ($400M) etc. You can move from Boulder ($600M) to Colorado Springs ($400M) etc. lot of people on the west coast in particular cash out and bank the equity for retirement and go somewhere cheaper. Was just in the Grants Pass/Medford OR area which is full of middle class CA folks who cashed out unrealized gains to retire.
A retired couple in their mid-60's just moved from Los Angeles into the house across the street from us in Durham, NC. The house they bought (paid straight up cash for) was about $380K. They don't look wealthy, probably solid middle class. But I am guessing their place in LA sold for high six figures, maybe $700 to $900K. He now has a new Porsche in his garage and two other more pedestrian vehicles (Mini Cooper and Camry). That's a nice chunk of liquid change to add onto whatever they had in their IRAs.
April 22nd, 2021 at 11:21 PM ^
That assumes that the house they sold in LA was paid off though, which seems like a big assumption for the average middle class West Coast homeowner.
Saw an interesting segment about this from The Hill:
https://www.youtube.com/watch?v=EBb9zf_zWvU
IMO, we're gonna hit a bubble on this but it probably won't pop for another ~2 years until the economy cools off post-COVID recovery boom.
Glad the forester and logger are about to execute my timber management plan on 30 of my 100 acres...... prices are good & the deer will feast on the buds off the tops.
Been trying to buy for 3 months. If you cant put a cash offer down for over asking then yer SOL. Looks like Im gonna be renting again.
I'm in Southern Denver and cash offers $100k over asking price on a $500k-$600k house are pretty common. It's ridiculous.
It's ridiculous.
Indeed.
I'm northside, Broomfield, and finding a home that we didn't get outbid on for a year was crazy.
And we weren't even asking for a lot when we'd make an offer. We were pre-qualified, didn't ask for anything from the seller, and offered 25% over. We were outbid by people with cash. I'm guessing from California.
Worth it in the end though. Broomfield is loaded with parks and open spaces. Love it up here (versus where wife was at at University and 470).
At first when I saw Broomfield I thought you meant Bloomfield and it was some inside joke.
Cleanest city in the USA!
Thinking about refinancing this year. Is this good news or bad for me?
your house will certainly appraise well because comparables in the area have likely sold high. interest rates have crept up a little bit still low. refis have been slowing some recently so a broker will work hard to find something for u to keep their revenue stream going.
Good. Interest rates are still low and values are high, so you will get a good rate and if you need to pull some cash out of your house to do something smart (like pay off high interest student loans) you can.
You would know your particulars far better than any of us, but FWIW, I refi'd this year. I only knocked about .8% off my rate and effectively 1 year off my term but it was still an easy decision since the numbers said I'd still come out substantially money-ahead long term. That said, I have no intention of ever moving, so that's obviously another factor you'd have to consider.
Lenders are very busy and able to be selective. May not get as great a rate as advertised if you refi’d somewhat recently. Shop around if you have a guy...
I refi'd last year. Went from 3.75% to 3.15%, and from 25 to 20 years. Not huge improvements, but good enough for me, as it also enabled me to get out PMI early. According to someone I talked to a couple months ago, he thought I would have been able to refi 2 months ago under 3%. Depending on your current situation, I'd say it's at least worth a look.
My wife and I just completed our new construction last fall. Thankfully hit a sweet spot between material prices going nuts and interest rates hitting rock bottom. We got locked in on a 30 year at 2.75%. My parents refinanced to 15 year at 2.15%. Crazy rates.
April 23rd, 2021 at 12:18 PM ^
We're in the process of building. Boy do I wish I started 6-8 months earlier. Luckily we locked in prices as of the January 1st, but it's still more pricey than it would have been before the jump. Good news is that I should be able to list and sell my current home easily and make some money back.
The appraisal of the build will be the interesting number...
We actually ended up refinancing twice last year. Got all the way down to 2.85 on a 30 year.
Unless you are refinancing to reduce the term length (say, going from 30 year mortgage to 15 year), I would advise that you don't bother as you are just adding more interest payments.
I went from 30 to 15 and I will be done paying mortgage in 3 more years. I cannot recommend this strongly enough.
Just closed my refi on Good Friday. Shaved rate by 1/3 and will save 15% with the new monthly payment.
It's definitely worth it to do now. Rates will likely hover where they're at until the end of the year but start creeping up again in January.
Watch out for closing costs. Looked into this not long ago, and found cases where for example a 30 year loan at 3.00% ended up costing more than the same term at 3.25% because the closing costs were higher for the lower rate. No matter what the rates do, you can be sure the banks will find a way to make money...
Literally just locked my refi rate this afternoon. 2.125%. Didn't think I'd ever see a rate that low on a 30-year mortgage.
Who did you lock with? I still need to get my refi done and that is a crazy good rate right now on a 30yr, especially if you’re not paying points.
Yes. Get good advice on a refi and it may be a really good situation for you.
We refinanced from 3+% 30 yr down to 1.875 15 year with our local credit union. Stupid lucky! we are paying the same amount we did at the higher rate but cut 15 years off of the mortgage as well.
I bought my first home in late 2018. I just refinanced last month and went from a 30 year to a 15 year. 2.25% baby
Just sold my place in Chicago at our list price. We even had a small price war with a couple folks (one of whom couldn't qualify at the price they offered). So yea, it's been good.
My wife immigrated from a highly politically conflicted South American country, where terrorist attacks were a common occurrence in her childhood. Last summer's political violence in Chicago was too much for her and she wanted out of Chicago. So that's why we sold. We are going to rent for a year or 2 in the Chicago suburbs and wait out any potential housing crises, then buy our "forever" home at that time.
That could turn out to be a brilliant move. Finances at the city and state level aren't going to get better any time soon.
We bought our condo in Chicago right before the last burst (closed in November 2007). It still hasn’t recovered to what we paid for it according to Zillow. We are tired of renting it and are going to prep and list it once our lease is up at the end of June. Listing would probably be sometime in August. We are just hoping this holds out. The agent said it might sell at what we bought it for. We would be so stoked. Any idea if Chicago as a whole is as crazy as what most of these posts sound like?
Chicago city as a whole is a crazy sellers market right now. I don’t know how long it’ll last, but you’ll probably be safe in August, especially as people are released from COVID hibernation.
Chicago suburbs? A little different story from our recent experience. The areas we are looking in the north and western suburbs have a decent amount of inventory, but not super motivated sellers. They are typically older folks, empty nesters who likely have paid off their house and live in another house somewhere else. They don’t have a ton of urgency to sell it, so it gets listed (mostly over-priced) and sits for bit and maybe drops the price occasionally. Plus, the house is likely a little outdated, but not bad, so it was often times a turn off for us. Half the houses we looked at were already empty (which doesn’t make for a good showing).
Good to have a local perspective. We are pessimistic and just assume the market will slow way down by then. We already calculated what we can sell for and it’d have to drop 25%, so we should be ok. Just antsy at this point.
April 23rd, 2021 at 12:00 PM ^
My sister-in-law and brother-in-law just sold a townhome in St. Charles in 2 days for 10% over list. That was on top of a 10% bump over what they were going to list it for before the realtor said they were underestimating its worth. Limited sample size, but it looks like a seller's market in the ChiBurbs to me.
I’ve been looking in Grosse Pointe and Raleigh. Not much on the market in GP. More in Raleigh, but man there are 20 offers before a house even hits the market.
Those are two very different destinations. What are the driving determinants?
Lot's of things are in flux right now. My wife and I are moving out of San Diego and putting our belongings in storage. Her parents are in Grosse Pointe. They're older and her dad has stage 4 lung cancer. We want to be close to them for the time being, but also could see ourselves putting roots down there.
My family is in Raleigh, and I prefer the weather there and love the greenways. It may be easier to start a family with my sister and nieces close by.
Both our jobs are remote, but I could probably find more future opportunities in the Research Triangle. We probably won't buy in the next six months, but we have been following the market to start thinking about options.
Sorry to hear about your FIL.
The GPs are pretty amazing -- even without family here. But I get the weather bit with family in the Carolinas of my own. Good luck on the move and decision.
After 10 years in San Diego we moved out in late 2011 to Durham, NC. We considered buying in Raleigh but couldn't pass up the value that Durham offered over Raleigh, Cary, Apex or Chapel Hill. If you don't have kids and/or don't care about lower rated public schools, I would take a serious look at Durham. I live in the Brightleaf at the Park neighborhood which was very close to my first employer in RTP (I've since moved on to a different company that is even closer to home). I can't say enough good things about Brightleaf. Homes in our neighborhood are generally $300 to $500k.
new housing prices are up 20% compared to 2020 and builders in Michigan are still forecasting a 20-30% increase in construction in 2021. That's how hot the market is.
Lumber prices are only going to get worse throughout the year. There are a lot of factors driving the price surge. Talked to a local lumber company today who said one big factor is that standing timber is not getting to the mills due to labor shortages. Also not getting lumber from Canada right now for some Covid related issue. Crazy shit!
It's not just lumber. Talked to a client last week who has a West MI woodworking business so he's been slammed since last year. Said that there are other building supplies like drywall, drywall mud, electrical boxes and circuit boards that have gone up 2X and higher. He's trying to stock up for future jobs as much as he can. Seems like having disposable income but nowhere to spend it except on home improvements is contributing along with pressures on just manufacturing or importing the building supplies.
Not just building supplies. I work in the ag industry and a lot of tractor parts and pieces have double in price in the last year.