Real estate prices......are they going crazy where you are too?

frenchyd said:

Snowdoggie said:

I really don't get it. Who is buying right now? We are in the middle of a pandemic and nobody wants buyers walking in and sniffing around their residence. Everybody is getting laid off or getting their hours cut. 

Jacking up property taxes for people right now is just adding to the malaise. 

Everybody?  Perhaps in your group but don't forget there is a whole group of people who are trust fund babies or upper management.  Successful  people, errr perhaps I should say financially  successful.  
Those are the ones who are paying what you think are silly prices.  
 

You obviously don't know my group very well. I have two uncles who are worth several million dollars each. One retired from a C Level executive position in a Fortune 500 Company. The other owns a huge ranch that has been in the family for generations and has served time as a State Representative. Most of Mrs. Snowdoggie's relatives are doctors and her cousin is married to a U.S. Senator. Between us we own two houses, one fully paid for and the other that will be paid off in two years. Nobody we know is buying or selling in this crazy market.

I also know a lot of people who are suffering from high rents and lousy wages and a few who are not working for the first time in their lives.

It's been nuts for awhile. We sold our house about 14 months ago and it was on the market for 5 hours, and we got more than we were asking

frenchyd said:

but don't forget there is a whole group of people who are trust fund babies or upper management.  Successful  people, errr perhaps I should say financially  successful.  

Those are the ones who are paying what you think are silly prices.  
 

Those folks are, quite literally, the 1%, and therefore not able to influence the majority of the market.  So they are not responsible for prices EVERYWHERE on EVERYTHING being up. 

Also, let's be clear about a few things:

-To be in the top 10%, you need to earn $158,000.

-To be in the top 1%, you need to earn $737,700. 

https://www.investopedia.com/personal-finance/how-much-income-puts-you-top-1-5-10/

Those numbers may not be as high as some people think when they think 1%'er.

So let's take it back to normal people, and use median numbers.  Side note: why do I use median for everything, instead of average?  If you have 4 people, 3 of whom earn $100,000/year, and 1 who earns $100,000,000, the average income of the group is $25,075,000.  The median is $100,000.  Medians don't let you lie to make yourself feel better or fudge the numbers.

The median household income (household, not per person) in the US is $63,000.  https://fred.stlouisfed.org/graph/?g=dmce  That means the median house price should be $250-300K if we want a median household to be able to afford it (home price is 4-5x income, and even that is a bit high vs historical norms of 3-3.5x). https://fred.stlouisfed.org/series/MSPUS  As those two numbers diverge, something has to give. 

Snowdoggie said:

frenchyd said:

Snowdoggie said:

I really don't get it. Who is buying right now? We are in the middle of a pandemic and nobody wants buyers walking in and sniffing around their residence. Everybody is getting laid off or getting their hours cut. 

Jacking up property taxes for people right now is just adding to the malaise. 

Everybody?  Perhaps in your group but don't forget there is a whole group of people who are trust fund babies or upper management.  Successful  people, errr perhaps I should say financially  successful.  
Those are the ones who are paying what you think are silly prices.  
 

You obviously don't know my group very well. I have two uncles who are worth several million dollars each. One retired from a C Level executive position in a Fortune 500 Company. The other owns a huge ranch that has been in the family for generations and has served time as a State Representative. Most of Mrs. Snowdoggie's relatives are doctors and her cousin is married to a U.S. Senator. Between us we own two houses, one fully paid for and the other that will be paid off in two years. Nobody we know is buying or selling in this crazy market.

I also know a lot of people who are suffering from high rents and lousy wages and a few who are not working for the first time in their lives.

I understand in a purely academic  manner that some people are really in a bad place.   I'm pretty well isolated here, surrounded by people spending millions.  Pretty safe, Economically it hasn't hit us yet. Of course we take all the health precautions.  
It's not fair, so many people struggle so hard with so little to show for it.  

Let's be honest, Money is so cheap now. My first place I bought in 2005 had a 7.25% interest rate. My mortgage now is 2.99%. The difference in payment is over a thousand a month between the 2 interest rates.

Even if you look approximately a year ago, the rates were in the 4.25% so same mortgage is $300ish a month cheaper. So even if I wasn't 100% sure that I wanted to buy, $300 a month is a heck of a motivator. So even in a hot market, let's say that is now $250 a month difference because you are paying a little more....It's still very motivating. 

So you feel good about your job and you have made it through the worse of it and are still employed....I would be looking if I wasn't already in the house I love. 

Flynlow (FS) said:

frenchyd said:

but don't forget there is a whole group of people who are trust fund babies or upper management.  Successful  people, errr perhaps I should say financially  successful.  

Those are the ones who are paying what you think are silly prices.  
 

Those folks are, quite literally, the 1%, and therefore not able to influence the majority of the market.  So they are not responsible for prices EVERYWHERE on EVERYTHING being up. 

Also, let's be clear about a few things:

-To be in the top 10%, you need to earn $158,000.

-To be in the top 1%, you need to earn $737,700. 

https://www.investopedia.com/personal-finance/how-much-income-puts-you-top-1-5-10/

Those numbers may not be as high as some people think when they think 1%'er.

 

So let's take it back to normal people, and use median numbers.  Side note: why do I use median for everything, instead of average?  If you have 4 people, 3 of whom earn $100,000/year, and 1 who earns $100,000,000, the average income of the group is $25,075,000.  The median is $100,000.  Medians don't let you lie to make yourself feel better or fudge the numbers.

The median household income (household, not per person) in the US is $63,000.  https://fred.stlouisfed.org/graph/?g=dmce  That means the median house price should be $250-300K if we want a median household to be able to afford it (home price is 4-5x income, and even that is a bit high vs historical norms of 3-3.5x). https://fred.stlouisfed.org/series/MSPUS  As those two numbers diverge, something has to give. 

I grumble because as a Vet I'm entitled to free medical care, except I make too much.  Does that make me sound like a greedy  ungrateful old codger?  Might I remind you that I'm a school bus driver?  That is if and when there is school again. 

frenchyd said:

Sine_Qua_Non said:

Snowdoggie said:

I really don't get it. Who is buying right now? We are in the middle of a pandemic and nobody wants buyers walking in and sniffing around their residence. Everybody is getting laid off or getting their hours cut. 

Jacking up property taxes for people right now is just adding to the malaise. 

Property management companies are buying up the cheap ones right now. They are making a killing in the rent and I am FLOORED that people are renting these house for more than what the mortgage would be for it. 

Without a down payment you can't get  a fixed interest mortgage  but you can rent.  

You can absolutely get loans with no down payment at a fixed rate. Lenders have stopped doing 80/20, 90/10, 96.5/3.5 dual loans to cover the down payment with a separate monthly payment. Now they charge a higher interest rate and put the 3.5% down for the government backed FHA loan.

It's how I bought my current house.

In reply to z31maniac :

I should have said no down payment and ruined credit.  Typical of those foreclosed on. 

frenchyd said:

I understand in a purely academic  manner that some people are really in a bad place.   I'm pretty well isolated here, surrounded by people spending millions.  

frenchyd said:

I grumble because as a Vet I'm entitled to free medical care, except I make too much.  Does that make me sound like a greedy  ungrateful old codger?  Might I remind you that I'm a school bus driver?  That is if and when there is school again. 

If you have to ask......

Time for me to bow out of yet another thread (repeating to myself: if you can't say something nice...), but I'll limit myself to: you can either brag about living in Millionaire, USA, OR bemoan your lowly status as a school bus driver.  It gets tiresome when you try to do both simultaneously and adds nothing to what was otherwise an interesting discussion.

It's nuts here, as well. People are moving out of NYC/Westchester and heading up to CT. Three houses within 1/4 mile have sold in the past few months, all with multiple offers over asking. The first two sold for about 8% over asking, and the last I knew, the third was heading in that direction, as well. 
 

I think our local market is being driven from the ability for most people to work from home. We're on the fringes of what some consider a commutable distance to NYC, and people can get a lot more house for their money here. Taxes are also far higher across the border in NY state.

It'll be interesting to see where things go from here.

In reply to pheller :

We're seeing a little of that as we (my mother, really) get ready to sell my aunt's house in the hills of south-western North Carolina.  Needs a ton of work and I'm not sure what the services are like.  It's not close to much of anything - the nearest large city is Asheville over an hour away.  It's a decent size house on a nice property, but it's not really worth much. It is kinda close to the Dragon, so I guess that's something.

What's going to be interesting is to see when and why (or presumed/advertised why) a correction happens. It always does. These things are cyclical. I'm no finance expert, just ask my wife. But money is cheap right now, cheaper than I can find any record of. And we've had more than a couple years of yuge economic growth. Or so we're told. 

For myself, we've never even been close to the national median income. I did ok at the dealer, but not ok enough to buy around here. Then factor in a huge pay cut to be an apprentice plumber (short term pay cut hopefully) and housing prices are still rising. Short employment history, not enough for a down payment, and not a chance of affording even regular mortgage/rent rates around here, and it's looking pretty bleak. Maybe time to think about relocating, but that's not without other difficulties. Seriously, stuff is nuts. My sister and her family were in subsidized low income housing 5 years ago and paying $1400/month+ utilities. Folks want $100k for a beat up old double wide, and then you still have to pay the lot monthly. I'm lucky to be where I am, paying family rent prices and sharing the house half the year.

I guess the short is I'm just watching because I can't even afford to pretend I have any skin in it. Good thing I grew up poor. I got used to it. 

dj06482 said:

It's nuts here, as well. People are moving out of NYC/Westchester and heading up to CT. Three houses within 1/4 mile have sold in the past few months, all with multiple offers over asking. The first two sold for about 8% over asking, and the last I knew, the third was heading in that direction, as well. 
 

I think our local market is being driven from the ability for most people to work from home. We're on the fringes of what some consider a commutable distance to NYC, and people can get a lot more house for their money here. Taxes are also far higher across the border in NY state.

It'll be interesting to see where things go from here.

I wonder if the companies that have said "Sure we will do this permanently," end up taking it back when things calm down, and then a bunch of pissed off people have a LONG commute.

Our company has said we have no plans for that and the offices will be open again at some point. I think they reopened basically all the offices in China back in April.

right now 1/3 of my county is unemployed.  Home prices are dropping through the floor.  It does not help that the town north of here is dirt cheap with low taxes and the town south of here is super expensive with low taxes.  We are in the middle with high taxes and not much to show for it.  

For a bit of perspective, we live about 30 km south of Vancouver BC, and are looking to move out of our townhouse and into a house closer to our kids public school. Here are the 5 houses for sale that are closest to our kids school (cheapest is just under 1.3 million):

https://www.realtor.ca/real-estate/22164587/11475-commonwealth-crescent-delta

https://www.realtor.ca/real-estate/21915487/11424-northview-crescent-delta

https://www.realtor.ca/real-estate/21715422/6885-rockford-place-delta

https://www.realtor.ca/real-estate/22198879/6684-ryall-place-delta

https://www.realtor.ca/real-estate/22187555/11252-sussex-place-delta

In reply to mainlandboy :

Vancouver for years has been dealing with foreign investors driving up prices, right?

Has the foreign buyers tax helped at all?

Doesn't look like prices around here have changed that much, but the area isn't that affluent in general (it has some pockets, though) and we're too far out to be in the DC commuter belt.

Mind you, prices *are* pretty high - I've been keeping an eye out for a potential rental property but basically everything fails the 1% rule by 50% and has been since I've been looking, which is for the last two years.

Snowdoggie said:

I really don't get it. Who is buying right now? Everybody is getting laid off or getting their hours cut.

At least where I am, I am one of only two people I know who has any hours cut or layoff so far when I had a two week furlough. I assumed our market continued going strong since Huntsville is so engineering heavy particularly with government spending in NASA/DOD.

I guess nationwide it is a combo of people who were not laid off currently are not spending at the rate they were before as so much is closed, working from home (so no gas costs) and a lot of travel is out of the question so they have extra money (plus the stimulus check) and interest rates are stupid low right now.

frenchyd said:

Snowdoggie said:

I really don't get it. Who is buying right now? We are in the middle of a pandemic and nobody wants buyers walking in and sniffing around their residence. Everybody is getting laid off or getting their hours cut. 

Jacking up property taxes for people right now is just adding to the malaise. 

Everybody?  Perhaps in your group but don't forget there is a whole group of people who are trust fund babies or upper management.  Successful  people, errr perhaps I should say financially  successful.  
Those are the ones who are paying what you think are silly prices.  
 

The smart successful people are not the ones stumbling in at the top of the market throwing stupid money at anything that moves. I smell desperation here.

Flynlow (FS) said:

Time for me to bow out of yet another thread (repeating to myself: if you can't say something nice...), but I'll limit myself to: you can either brag about living in Millionaire, USA, OR bemoan your lowly status as a school bus driver.  It gets tiresome when you try to do both simultaneously and adds nothing to what was otherwise an interesting discussion.

:golfclap:

Prices of existing homes in my township (zips 48187 and 48188) have moved at a typical rate, but it seems like all the new construction are $400k and up up up. FWIW we bought our current home for $183k in 2010. It was foreclosed and vacant for 6 months. That was a pretty decent price at the time. Today, comps in this zip are $275k-$325k.

It's insane around here.

I bought my house for 315K in 2014 and I could easily sell it today for about 425K without having done much except maintenance.  I have one of the cheapest house in my neighborhood and yet I know I'm part of the upper 10% of earners...

Put me in the camp that does not understand any of it.

barefootskater said:

What's going to be interesting is to see when and why (or presumed/advertised why) a correction happens. It always does. These things are cyclical. I'm no finance expert, just ask my wife. But money is cheap right now, cheaper than I can find any record of. And we've had more than a couple years of yuge economic growth. Or so we're told. 

For myself, we've never even been close to the national median income. I did ok at the dealer, but not ok enough to buy around here. Then factor in a huge pay cut to be an apprentice plumber (short term pay cut hopefully) and housing prices are still rising. Short employment history, not enough for a down payment, and not a chance of affording even regular mortgage/rent rates around here, and it's looking pretty bleak. Maybe time to think about relocating, but that's not without other difficulties. Seriously, stuff is nuts. My sister and her family were in subsidized low income housing 5 years ago and paying $1400/month+ utilities. Folks want $100k for a beat up old double wide, and then you still have to pay the lot monthly. I'm lucky to be where I am, paying family rent prices and sharing the house half the year.

I guess the short is I'm just watching because I can't even afford to pretend I have any skin in it. Good thing I grew up poor. I got used to it. 

This is what I'm mostly concerned about. Though our income is relatively high compared to the national average, it is pretty low for our area. Admittedly we're in a nice suburb, but even if we were earning the national average in the next town over, we would not be able to afford it. My brother and his fiance are living with my parents right now. I am not a financial expert, but I do crunch numbers pretty well. I sat down with him. Yeah, there were some things he could cut from his budget, but it wasn't going to materially help him save for retirement or for a downpayment. Over 80% of their income - also below national average - was going to rent, which was as cheap as I could find, health insurance, and medical care for relatively benign issues. And they don't even have student loans! 

I grow weary of the [one side of political spectrum] stating that we're pissing on the lower class... But damn, something is really berkeleyed up here when you can't afford to go on vacation at a place where you have free lodging. 

House across the street from me was listed 1 week ago and sold in 1-2 days for I assume full asking or more.  What they listed it for my wife and I thought was a real reach.  It's the same model house as ours and does have a bedroom/bathroom in the basement we don't have but our house is much nicer inside. 

We bought our house in '08 and at this point it's appreciated almost 100%...

As others have pointed out tho, there's nowhere to go.  We don't want to leave this area and any other neighborhood we'd want to move to is even more expensive than our current one.  I like our neighborhood, so no plans to leave until my son is about out of the house.

My parents house in La Jolla has probably gone up 400% in value since they bought it in 1990.  That's to be expected in that area tho...

In reply to docwyte :

I can only imagine what my mom's new husbands house is doing in Del Mar.