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 bought a new house in Houston last March, the county appraised the property at 40K more than I paid...
Hire Novotny each year to protest for you. It's cheaper than what you will pay each year in tax increase if you don't.
I can tell you about last year. We sold our starter house in 30 hours for $5,000 over asking price. The buyers wanted 6 weeks to close, so we had 2 weeks to find something and start the 30-day approval clock. We found a place on day 14. It was on the market in the AM, we offered in the PM and they accepted the next AM. We bid their asking price, which they accepted, but had up to $10,000 in escalators. Based on online RE calculators, they're saying the value of my house has gone up $15,000 since Aug 1 when we closed.
There were 2 other houses we were faintly interested in. One wasn't quite what we wanted but since pickings were so slim we took a day to consider it. When we went back to our agent to make an offer he said it sold that first day. The 2nd house was at the top end of our budget so we hesitated only a few hours there and it too sold.
Thankfully the previous owners of our new house had put a lot of money into updates so we don't need to do much there. However we're on a hill leading down to a creek with walls built from railroad ties to control erosion. They're real old, like rotting away old. That's on my list to start rebuilding this summer. I planned on using landscape blocks, but hearing some of you guys talk about how prices have gone up, maybe I'll just start hitting all the local farm fields and fill up my truck with fieldstones. That would look real nice plus my only expense would be mortar.
we bought our new home in March and after moving & repainting the old place, finally put it on the market Tuesday. We got an offer the same day for over list price (which was already 50% more than we paid 8 years ago). another offer came in today. We are going to make a decision on which to accept in an hour here - one is higher, but will use an FHA loan and we are worried it may not appraise.
avoid FHA loans if at all possible...go back to the non-FHA offer, say you have an FHA offer for $X and that you'll sell it to them if they come up to the FHA number
April 23rd, 2021 at 10:51 AM ^
exactly what we did. went back to conventional loan person and asked them to up their offer and they agreed (partially). Still on the margins, a few extra thousand is nothing to sneer at. Also after that little negotiation, i feel they will be less likely to ask for concession post inspection. They know there is another competitive offer out there so asking us to put a new roof on is more risky
We're in our first home. Been in a suburb about 25 mins north of downtown Atlanta for about four years and we're not planning on moving anytime soon. Main reason is because its a house we can grow into. We have one kid now, but our house is four bedrooms, so we've got enough rooms to have two more kids if we really wanted. We pay less on the mortgage, taxes and homeowners insurance for our four bedroom house than we did in just rent for our old two bedroom apartment. We're just happy where we're at and aren't far away from all the things we want to do.
Second reason is just that we've seen our house appreciate nearly 20% in value since we've moved here. We've put a lot of work into the house. Brand new oak floors on the first floor, renovated our master bathroom, re-painted everything, etc. We're in a great neighborhood with amazing schools, and two huge multi-purpose town centers have just been built within the last five years that are both about a three to five minute drive from our house. Bars, shops, restaurants, movie theaters, etc. Financially and logically it just makes no sense to move right now. The Atlanta housing market has been killing it the last few years. We'd make money selling our house, sure, but I don't want to think about the struggle of having to find a new place anytime soon.
We'll move to a different house eventually. I do not see my wife and I as being the couple that lives in the same house for forty years. I sure as hell don't want to be that couple. But I wouldn't be surprised if we were still here in ten years.
My daughter bougth a new 800 square foot condo in Bushwick, Brooklyn New York 6 years ago for $299,000. She sold it in January for $625,000. Her friend in the same building sold her 850 sq, footer with a walk out patio yesterday for $800,000, market there is stupid.
It's absolutely bonkers right now in NW Ohio. Neighbor built in 2015 for about 315k to 330k, they just listed for 440k !!!
They received an offer of 452k and took, absolutely insane. Would love to put mine up but then what the heck would I end up overpaying for?!?!?
I'm planning to buy in ca. 18 months. I'm glad it's not right now. But who knows if it will be better then. I have no house to sell so I can't cash in on the current hype either. I'm one of those urban millennial renters, who's now looking to get out of the big city and into a more quaint and relaxed suburban environment.
I could probably afford current prices, but I don't want to be the dumbass who buys at the height of a real estate bubble either.
well, i'm a lumberjack and I'm okay.
I close on my first home May 3rd. It was pretty terrible looking for homes. Anything that was priced decent was either immediately bought by "flippers" or foreclosure style wrecks. Some sellers received and accepted offers before even showing the house. I would have saved 18% on total sales price if I had pulled the trigger two years ago.
We were supposed to do an addition to the house which would have started around March, but decided to just refinance and hunker down. We got lucky to say the least based on the cost of raw materials.
We were supposed to do an addition to the house which would have started around March, but decided to just refinance and hunker down. We got lucky to say the least based on the cost of raw materials.
Bought a house in Toledo in 2013 for $59k, sold it last month for $129k and then bought a house in Sylvania for $250k.
I just bought and sold. Our old house was in a very hot place of Tulsa and we had multiple offers right away. The house we bought is much bigger, but just far enough out of town to be less in demand. We see this new house as being somewhere we live for a long time so I’m not worried about the bubble.
So we already refi'd last April. took off 7 years and 2+%.
Now, with the inflated values we're thinking of regging a HELOC or Home Equity loan to do some improvements.
Hopfully any added value will offset the eventual cooling of the market 2-3 years from now. Plus the work we're looking to do has little lumber involved so those costs will be minimal.
My wife and I bought a house in the Lansing area in 2013 for $285,000. Last year we decided we wanted a bit more land for our kids to play on, so we started looking, but couldn’t find the right house at the right price. So we decided to build. We put our house up for sale on a Monday evening and accepted an offer that Wednesday. Sold for $400,000, a solid 40% increase. Our builder is breaking ground on Tuesday. Living with the wife’s parents in the meantime. Fun fun. But we are fortunate to have locked in the build price.
This housing market is yet another way that people in their 30s have been royally screwed by a generation of older Americans.
I'm in my late 20's and I feel pretty damn screwed as well.
Home prices in my town in Central Washington went up 19% in 2020. Of course that's part of a larger trend that has seen prices up nearly 40% over the last 3 years. Median income: $55k. Average home: 370k+
Must be a lot of house poor people there.
The older locals mostly got houses a while back at cheaper prices. Things were good until about 4 years ago and then they exploded. Younger locals are hurting because rentals are out of sight and they have no hope of purchasing. Most homes are being sold to people from out of the area, lots of Seattlites who can't afford to buy over there are buying here as "second home" and using it as an investment + vacation + rental. There's also land investment companies buying up homes and just letting them sit empty. Lots of flipping going on. Saw a house the other day that just sold last year being flipped at an asking price of $150k more than it was purchased for - no remodel or anything.
The housing markets were already overheating and then a bunch of people got stuck at home, likely saved a bunch of money, and those in cities considered moving out to a bit more space. We bought our house less than 2 years ago and could likely sell it for $100K+ more without even listing it. We don't have plans to do that but it is weird seeing smaller, older houses in our neighborhood being listed for more than ours consistently. But this market bubble will burst in a year or two, and in the interim rentals seem down in some markets so if you can hold out you might be able to snag a deal.
My wife and I are about to close on a cash out refinance (cash out to pay off mortgage on a second home) and we are replacing one mortgage with 28 years left on it at 4.5% and our principal residence mortgage with 12 years left at 3.875% with one 15-year mortgage at 2.75%. We haven’t always made the best possible decisions in our lives but this one is definitely the right one.
Finishing up my MBA at Ross next week and have an offer in hand but am still trying to get another one with the firm I want. Wife and I got married last year and have been renting a house for the time being and... yeah every time I see something I think we would be seriously interested in, it's gone within 2 or 3 days. We haven't gotten approved for a mortgage yet because of my current job situation. Once I sign on the dotted line for my final offer, we'll get all the paperwork together and go.
Some student loan debt, but decent cash reserves and hopefully a very aggressive post-MBA offer and we should be ok. Still uneasy with how things are trending right now. Fees like we'll buy at or near the top of the market in the near term. I'd be ok settling into a place for 5-7 years no problem, just makes me nervous.
My wife and I got very lucky. At the outset of Covid last year, we finally decided to be first-time buyers since interest rates were chopped and we both work in essential businesses. We bought a new construction in a Kalamazoo subdivision last May - since then, the lowest priced townhouses in our development have already been increased roughy $25,000 to $30,000. Our timing was great but I feel bad for folks in the hunt now.
Bought my 4 bed 3 bath house in Northern Indiana for $64k (foreclosure, but in great shape, built in the 90s) during the recession, and got almost $8k back for the first time home buyer's credit. Just got appraised for almost $300k. I was upset that commissions were down (industrial sales) when I got my first full time job after college during the recession, but what I saved on the house was the biggest benefit ever.
Housing prices have sky rocketed in the last 2 years here in Kansas. I bough my 3 bed, 2 bath ranch for 91K in 2002 and now similar homes are selling for over 200K in my neighborhood. I have not decided where I want to retire but part of me would like to sell now, take my 110K profit, rent til I retire in 5 years, then after a housing market correction, buy my retirement home.
I feel like a better option for us in the current market is to buy a piece of land and build our forever home. We are both fortunate to have the ability to WFH and will likely only see part time commuting in the future. Happy life means separate work spaces for each of us, and I think we can make that work in a design that will flexible enough to support multi-generation care.
The toughest requirement to meet in our search is broadband access. Rural broadband buildout, if it happens, will be a game changer for those in situations like ours.
April 23rd, 2021 at 12:51 AM ^
Amen to that. High speed internet on the outskirts of major metros and beyond is criminal.
Our house in Birmingham is going on the market Saturday. We did an extensive market analysis and then tacked on an extra 10% due to the nature of the market. Five showings requested in the first 24 hours in coming soon status and lots more interest, feeling relatively confident we’ll get our price. Good luck to all the buyers and sellers out there!
I would love to sell my place in Oakland County and rent for 2-3 years when I retire. Now if I can get the Wifey to go along with it.
I live in the burbs outside Toronto, purchasing housing isn't really an option. The market here was unaffordable before covid and its' worse now. Toronto I believe is one of the 5 worst markets on earth for affordability.
Have basically decided to move to San Diego because the cost of living is lower and I could come close to doubling my income. This sucks for my wife because her job is highly specialized and her dream job and I feel bad about it it but I just can't take these winters anymore and I'm rolling up on 40 this year. I have a friend from here who lives in SD now and he jokes that between his family in Toronto and his siblings in SF & NYC he's living in the "affordable" place.
This that OVO, that SZN, this that new Toronto
I bought my house (2 years old custom built home from a top notch homebuilder) right before all this craziness started happening with the market. My home value has gone up like 20% in the last year. in a year or two when I finish the basement and add 1200 more square feet and another bathroom it’ll go up more. So I like the market now
My new plan is to rent forever and figure out retirement when I come to it.
I hope this is a bubble and there is a market correction and it crashes, but I don't think that's necessarily the case.
New construction costs a butt ton. There's a whole new generation of people who are trying to buy homes and can't. Those people aren't going away and there's a generation right behind them.
Supply may never catch up with demand.
Property is robbery
I'll never understand how there are ten million vacant homes in this country but we still have people who are unwillingly homeless
Out of 130 million homes in the US, some are going to be vacant at any given time. But a bunch of those 10 million vacant homes are vacant only for a period of time between sales. Including such as between previous owner defaulting on mortgage and bank reselling the property. It is a churning set of properties, not a static set of properties. There is always an owner who is deciding what to do with it, which could be selling it or renting it at market, or providing it to people in need at below-market rates or for free as part of charity.
I am a home builder, have been for a long time, and this is what is happening . . . assuming you believe in supply and demand impacts on markets.
Carpenters - too few
Electricians - too few
Plumbers - too few
Roofers - too few
Trade Schools - too few and not enough students
Truckers - too few
Labor = EXPENSIVE
Regulations, codes and permitting - expensive
vacant land - expensive and often not ideally located
tree clearing - expensive
lumber - expensive
copper - expensive
materials - expensive
excavation - expensive
concrete - expensive
Airbnb - Adds to the competition and demand for inventory
houses - TOO FEW
Home Buyers . . . too many
College Students . . . too many
Middle Managers . . . too many
Office Workers . . . too many
This is a housing crisis and the cake is baked for the next 20 years. You probably will be hard pressed to find one data point that actually brings the price of houses down in the year 2021. I certainly can't think of one.
You will hear stories about housing starts being at an all time high, but am pretty certain a huge percentage of new housing starts will be apartments. So this data is not an apples to apples data point any more.
April 22nd, 2021 at 10:02 PM ^
There will probably be a dip after the next bear market ( I don't count the COVID bear market), but at sometime in the next decade we probably will have another recession. Interest rates will increase and demand will decrease. But it will just be a brief one or two year window. So be ready to jump on a retirement home when the housing market dip occurs.
I’m serving as GC for my basement project and forced to serve as a couple trades and I’d say your list reflects my experience! The lack of labor in Michigan leads me to believe the prices aren’t nosediving for new construction...
Thanks for your insight and post, willirwin. +1
April 22nd, 2021 at 10:50 PM ^
We bought last August. Our family had been renting a small apt after selling our previous home in a different suburb.
I’m grateful we were looking then and not now, because the inventory stinks now.
Interest rates are crazy low by historical standards. You can get a 30 year and just refinance if rates go even lower. Also, if there is significant inflation on average over that period, you can let inflation eat all that debt.
So then why are people pumped about refinancing to 15 years? Would the hedge against inflation be more valuavle in year 30 vs 15? And thats before I consider only paying enough down to cover PMI and investing the rest in an index fund, which is extremely likely to outperform ~3.5%.... I think?
We just talked to a younger couple this week here in West MI who are struggling to find a home to buy. They said they’ve made several offers that were over the listing price only to see the homes sell for $30-40,000 more than what they’ve offered.
Crazy times.
April 23rd, 2021 at 12:44 PM ^
Listed my house and it took 2 weeks and 3 days to sell. Bought the house in 17 as a new construction spec home and gained 10% per year in value. My house wasn't the best house either. It backs up to a detention pond, it's on a weird lot that's pie shaped, so it's .3 acre, but wide and not deep. On a pretty steep hill. 3600 sq ft with an unfinished basement. I'm in the Atlanta area (Forsyth County). I priced my house insanely high with the idea that I didn't really care if it sold. If it did, I had a ton of cash in my hand. If it didn't, I didn't lose out on anything. Ended up with a cash offer over the 540k we were asking for. We decided to rent for a year and then build a custom home in a neighborhood that will make my wife happy. Unfortunately, I'm now paying the insanely high build prices.