Real estate in 2021

[Leeloo]

My husband and I are looking to purchase our first home. We started the process before COVID and then obviously had to put it on hold. But we feel now is the perfect time to start looking again.

We have a little saved and our budget is low to median for the area. Our credit is good and we are pre approved for a loan within our means at a decent rate. We have a trusted new realtor who helped my parents find their current house.

I’m wondering if anyone has bought any property recently and could share advice on how the pandemic economy factors effect the process?

One thing we have noticed is that we expected it to be a buyer’s market with lots of people being foreclosed out of their homes due to COVID. However the opposite seems to be the case and there’s not enough homes for the demand. Sometimes a listing will have several offers before we even hear about it. Are people just offering sight unseen and just being super competitive right now? I don’t know much about real estate and it’s been frustrating not to have had much luck.

 

[messaggera]

It is a seller's market in our area.
There are homes that are in our area, and an 100 mile radius, that never make it to the market because agents are working with individuals.
Once a house is listed with a MLS it is in the system. Some agents present a house to buyers before the offical listing.

I understand your frustration. We have been looking to move out to more rural area and land goes fast!
Most homes I find of interest to look at are contingent - usually going through a finance process to buy.

Another issue you may run into is the cost of the house. You may be pre-approved for the amount, but then the bank comes and requests an audit on the home you are interested in purchasing. If the audit comes back under the listing the price you may have to negotiate with the seller or put cash payment down.

Before meeting my husband I bought my house right at the bubble. Now it is audited at 20k$ less of the purchase price, but I ended up refinancing at a lower interest rate a few years ago. So we actually pay less on our mortgage than if we were to rent in the area we live in now.

Sometimes I wish we could pick our house up and put it on some acres.

I would suggest - if you are looking at homes with basements to have a radian test completed. When looking at homes in the States this is an informative site, https://www.realtor.com/, because it will show:

Flood zones
Crime
Noise

Having a realtor is a huge help in finding the house before it even goes to market.
However, your realtor may not point you to the foreclosed homes - you may have to look for yourself at the foreclosed price or sometimes you can find a home through a sherif's sale.

Hope this helps.

Edit addition: if purchasing in the states I would also suggest this website http://www.criminalwatchdog.com/neighborhood-watch/
The site is suppose to show you registered sex offenders in the area.

 

[Luna Novem]

It's absolutely a seller's market in my area as well. Homes get snatched up before you can say Jack Robinson.

 

[Leeloo]

Thanks! It is helpful.

We would definitely do the radium test. It’s cheap and in this area it’s a good idea.

We can get pre approved for a lot more than our target budget, so we’re sticking with that. I understand a lot of people don’t know their means and we don’t need much. It’s just the two of us. It just seems that everyone in this area has the same target price.

I think you’re right about having a great realtor, and the right one. We just started working with a guy who has a great reputation. We were working with a lady prior to COVID that... did not do well by us. Long story, but I think we’re good now and a lot more motivated than we were a year ago.

I’m going to stay positive and hopefully all will go well and I will have some news to share sometime soon.

 

[Mrs.DanielH]

Homes in our area will have a sign saying "coming soon" on the lawn, then two weeks later "sold". Surprisingly homes are being sold at their valued rate and not being bid above their value. I don't understand that part of it.

 

[normiewife]

If you can wait to buy, I would wait. This seems like the 2008 housing bubble crisis on steroids. Pick up a deal when the market is down. We bought in 2010, a nice foreclosure on 25 acres, and paid it off this year. Paid under 200k. Unbelievable deal. Now completely debt free.

 

[Starlight]

If you can wait to buy, I would wait. This seems like the 2008 housing bubble crisis on steroids. Pick up a deal when the market is down. We bought in 2010, a nice foreclosure on 25 acres, and paid it off this year. Paid under 200k. Unbelievable deal. Now completely debt free.

I agree. My husband and I were considering moving but we’re definitely in a housing bubble where we live. It does feel very similar to 2008. People are plopping down $500k+ *cash* for homes sight-unseen. Homes are being sold within hours of being listed, many of which are way over-valued. People are fleeing the cities in droves. That, coupled with the COVID shutdowns and a possible recession or collapse of the dollar, makes buying a new home a risky choice right now, imo.

The only positive I see is that there aren’t huge subdivisions (at least in our area) being built in response to the housing shortage like there were before the recession. I imagine home prices will eventually drop but in a much slower and controlled way, not a crash like last time.

 

[Kitty Tantrum]

We're waiting. A lot of people with money have impulsively picked up and moved into the rural areas. Most homes are sold before being listed. Many sold sight-unseen. It would be silly to try to buy right now. Prices haven't gone up much, surprisingly, there's just not much available.

I anticipate that once (if?? lol) the cities are all "open" again, there will be plenty of folks who can't hack it in the country or just bit off more than they can chew, who will be eager enough to sell.

I also live (and want to continue to live) in an area where (flagrantly unconstitutional) land/water use and development restrictions are unfortunately the norm. I suspect this may change one day, but for right now is a big limiting factor. It's a potential opportunity, too, though: land you're not allowed to develop or drill a well on is relatively cheap. Could be advantageous to purchase a "recreational" parcel in a good spot with an eye to the future when such regulations may change. I could certainly put the land to good use in the meantime regardless.

 

[Sherman]

There are people calling my phone and sending me post cards wanting to buy my condo. I was told that it is because of the interest rates.

 

[EndlessGravity]

I've been in real estate investment for almost 20 years. Despite what people are saying, this isn't a seller's market. It's a very screwed up market and it depends on what you're trying to do. It isn't going to end well for a lot of folks.

I've mentioned in other threads that we're in the process of selling and buying. Inventory throughout our region is down by about 25% or 30%. I can sense that realtors are getting a little desperate as their buyers have their potential loans fall through at closing or, in our situation, we can't find an acceptable house that we're willing to buy at all, tying up our much more desirable property for someone else.

Where we're selling, prices are rising; however, where we're looking, more rural, prices are soft and lightly falling on most properties. Everyone in that rural area keeps telling me how hot it is...but the month-to-month data proves otherwise. This area though has the best properties disappear in days, with buyers not bothering to look at the properties. It creates a weird situation, one of the worst I've ever seen.

Kind of like we've done for other investments, we're waiting and researching more carefully. This helps us find a diamond in the rough that others aren't able to identify. IMHO, this is a much better approach rather than letting the emotions of the crowd make your decision for you. We're going on almost a year looking though, so we can sympathize with your frustration.

 

[Lamkins]

Congratulations! Our house sold for full price last summer within an hour of going up. We also had a full price offer sight unseen along with multiple viewings already scheduled.

Real estate transactions have been going digital for awhile now. Even ten years ago we signed almost everything digitally over email. The only difference we saw during covid was mask wearing at closing.

Have y’all considered building?

 

[dragonfire00]

My husband and I are looking to purchase our first home. We started the process before COVID and then obviously had to put it on hold. But we feel now is the perfect time to start looking again.

We have a little saved and our budget is low to median for the area. Our credit is good and we are pre approved for a loan within our means at a decent rate. We have a trusted new realtor who helped my parents find their current house.

I’m wondering if anyone has bought any property recently and could share advice on how the pandemic economy factors effect the process?

One thing we have noticed is that we expected it to be a buyer’s market with lots of people being foreclosed out of their homes due to COVID. However the opposite seems to be the case and there’s not enough homes for the demand. Sometimes a listing will have several offers before we even hear about it. Are people just offering sight unseen and just being super competitive right now? I don’t know much about real estate and it’s been frustrating not to have had much luck.

We just sold our house in a west coast city, and bought one recently. Double mortgage is such a bummer but it was worth it. Like, if you know where it was you would get it haha.

Both places were a seller's market with low inventory. In a seller's market if you want a house you essentially need to pay around what the asking price is. We had a great buyers history so we went under by 10K and they countered with $5K more, if there is low inventory I would recommend not waiting for your realtor to email you the houses and check yourself once-twice a day when they come on the market since they get swooped up! Your realtor should have a website through the agency that you can check, don't rely on sites like Zillow. Also, as much as I hate social media it may be worth it to join a group of where you're intending on moving and asking if someone is going to sell their house and put your feelers out there.

Also make sure you wait to tell people about it until you have the house inspected as you might find things that are a deal breaker. I think in a year there may be more foreclosed homes but because of all the government policies to keep people from getting evicted and printing out money it's artificially inflated. If you're a first time home owner and don't have the time/ability to fix things up I don't recommend getting a foreclosed home as there's usually a lot wrong with them and spiteful owners will damage the house.

 

[Leeloo]

Thank you all so much for the replies. There’s a lot of good information here. We will take it all into consideration to decide how to move forward.

 

[Nacho]

Got lucky and bought a home right before the pandemic hit when rates were higher. The market was still hot with homes being snagged up pretty quick. With the rates lowered currently I'm not sure if I would have been so lucky. My home's assessed value has already jumped up about 20% and the market is sizzling right now.

It was pretty stressful and time consuming looking at homes and making sure the it was something that was a good fit considering knowing that offers were coming in the first day on many listings. The key is to know what you want and be ready to jump on something fast.

Having a good experienced realtor is vital. Look at the MLS daily and be prepared to strike when ready. Keep in mind as well a seller more than likely is looking at multiple offers on the table. A good realitor should be able to find out this information and be prepared to make an offer that will entice the seller to favor your offer. I offered paying full closing cost because my time was more valuable than losing out on the property I really wanted. You can risk waiting longer hoping the bottom will fall out but that may not happen for awhile considering rates are at historical lows and may remain so for the time being.

 

[cosine]

Denver currently has hideously low inventory. This weekend I helped a client submit an offer. The house was "priced to sell", but we were one of 20 offers.
Other listings have received 100+ showings.

People have cash right now. If you did get laid off, you probably received handsome unemployment, and likely haven't been spending much on restaurants, travel, etc. Throw in a couple of stimulus checks and low interest rates, and many people are jonesing to buy.

 

[BlastbeatCasanova]

I've been in real estate investment for almost 20 years. Despite what people are saying, this isn't a seller's market. It's a very screwed up market and it depends on what you're trying to do. It isn't going to end well for a lot of folks.
.

I get what you’re saying but as the current conditions favor the sellers, wouldn’t that technically make it currently a “sellers market?” Not sure how things are going to pan out but all the fed money printing from COVID has me skeptical. From your experience do you think it’s worth getting into residential real estate at this current point in time?

A reliable connection in a real estate adjacent space who’s privy to the current trends says lot of people are buying houses now because of 1.) historically low interests rates 2.) mortgages that cheaper than their rent, also getting equity/the investment of owning vs “throwing away money to landlord” (pretty standard) and 3.) the pandemic scared folks from renting and they want to be in control of their housing. Also he said every home has tons of offers, investors with cash scooping up properties from families, people waiting in line to see properties, etc.

Pro-tip: I’ve heard several folks secured the purchase by writing the previous homeowner a handwritten emotion note about how the potential buyer could see themselves raising their kids in the house, taking care of the house, making memories in the home, etc. These folks selling have an emotional attachment to these houses they’re selling, emotion is powerful and I’ve heard of sellers going with their offer because of a well written letter. Take that to the bank.

I definitely see the appeals of homeownership but I hate the fact that you have to pay property taxes on it until the end of time. Pure robbery IMO

 

[Starlight]

Pro-tip: I’ve heard several folks secured the purchase by writing the previous homeowner a handwritten emotion note about how the potential buyer could see themselves raising their kids in the house, taking care of the house, making memories in the home, etc. These folks selling have an emotional attachment to these houses they’re selling, emotion is powerful and I’ve heard of sellers going with their offer because of a well written letter. Take that to the bank.

In my experience, sellers don’t care about your letters or family or feelings. They want the most amount of money they can get for the property. I actually wrote a few really heartfelt letters to sellers when we were trying to buy a home years ago and feel like an absolute fool for doing so.

But if you feel like it might help your chances then go for it just don’t be upset when they take the highest bidder.

 

[Hypno]

1. Its a sellers market, particularly in price segments where there is a lot of demand.
2. Interest rates are at something like 50 year lows. Its not been cheaper to own a home during the past 50 years.
3. If you think you will stay in an area for several years, buy a home now. Pay asking price. Don't screw around.
4. Inflation is coming eventually. Buy real assets like real estate.

 

[BlastbeatCasanova]

In my experience, sellers don’t care about your letters or family or feelings. They want the most amount of money they can get for the property. I actually wrote a few really heartfelt letters to sellers when we were trying to buy a home years ago and feel like an absolute fool for doing so.

But if you feel like it might help your chances then go for it just don’t be upset when they take the highest bidder.

Emotion is very powerful, hence why game, marketing, sales, etc are so effective. I’ve talked to more than several people who left money on the table because they had rapport and a connection with the buyer. People put emotion before money all the time; the recent GameStop fiasco for example.

 

[EndlessGravity]

From your experience do you think it’s worth getting into residential real estate at this current point in time?

"Seller's market" is a dumb realtor term. I don't know that any other market in the world uses a term like it. If you've ever known lots of realtors, they are, as mentioned in this thread or others, ignorant about physical structures, the economy, the financial industry, and the real estate market. I just don't think about markets as "seller's" or "buyer's" since you negotiate your own situation.

Right now the market should scare anyone who owns real estate or plans on it for two reasons. I'm watching as many loans fall through at the last minute. That's one. The other is that most people who are selling have to buy...but with a 60% reduction in inventory in some areas, they can't find another home. I don't just mean being priced out of a similar home...I mean there is no house for them to buy elsewhere. Prices are very soft in some areas but surging in others.

What you're looking at isn't a "seller's market", IT'S NOT A MARKET. From my experience this looks like a failing market, even if people will always continue to buy and sell real estate.

This is like the last days of Tulip Mania. It looks good and you can get caught up in the emotions. You could also make a lot of money selling at the frothy top. However, a lot of people are going to get very burned when the government can't sustain those moratoriums or the system can't handle them any longer. After many decades, I try not to give investing advice unless I'm very familiar with what someone is trying to do...but for regular folks, I would be very hesitant and cautious entering into any real estate transaction in 2021 or in the next couple of years.

You should know I'm in the "deflation camp" though but I do think we'll see extreme forms of stagflation. However, I'm betting on deflation in real estate. Barring the Great Reset, now that we've destroyed what remained of our shaky economy, things are going to get ugly when the next dollar shortage hits the market.