Real estate thread

FactusIRX

Kingfisher
I recently spoke with a friend in Toronto. He presented a case for a possible pause in Toronto real estate (which is basically a bear for Toronto).

Simply put, as the prices are flying so high, more people are getting greedy and putting their homes on the market. Simply put they want to cash out. As this occurs, you get more supply, which then reduces the competition for the homes and causes a price decline or normalization. I think this makes sense, the market needs to normalize. Many have been smart jumping into real estate with this money printing. But it's hard to know where the money printing stops and the frenzy begins. You'd have to be a master in econometrics to be able to gauge it, along with an economy that must be shrinking.

Either way, we just don't know where we stand. The rules of the game can change at any moment with stimulus spending or a fed announcement.

Also, interesting little strategy here to present against downside if you do decide to buy into the climb. As you buy a home with an over inflated price, hedge it with a Short on Real Estate ETFs to balance out your risk.

One of the reasons the prices are so high is because of low inventory. There's low inventory because Boomers don't want to sell. Boomers don' t want to sell because they a) can no longer buy property cheap someone else (normally, they buy in Florida or Arizona, but their housing prices are just as bad) b) they don't want to move into senior homes because of COOFID.

People also won't want to sell unless they absolutely have to because prices are high everywhere. If you sell, you still have to buy.

The only way the housing market will correct is with a crash, or with a return to complete normality (i.e. pre-COVID).
 

Max Roscoe

Kingfisher
Over the long term, owner-occupiers are the largest component of buyers in the residential real estate market. As 60-66% of homes nationwide are either fully paid off, or are owned with a mortgage, buying property in areas with a higher proportion of owner-occupiers will ensure a safe investment.
The stats on American home ownership as long as I've been following were always roughly 1/3 own their homes, 1/3 live in a mortgaged home and 1/3 rent. This is nationwide. I would be very surprised if these numbers substantially changed.
 
Just as info for anyone who wants a really easy, Excel / data-based way of looking at whether their local market is hot or not, over-saturated or not, prices rising or falling, simply use Realtor.com's weekly or monthly aggregator data for your local zip, county, state, metro, or national. I find there's no need to really pay attention to a lot of these speculation articles when you have easy data to play with, as long as you can make sense of what the column headers are telling you. Great way to quickly analyze new real estate markets numerically https://www.realtor.com/research/data
 
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C-Note

Ostrich
Gold Member
Seems to me that if you're looking to sell and find a cheaper place to buy, you should look for a condo in a city center. Of course, if you're going to live in a downtown area, you want a city that isn't governed by a clown world, pseudo-communist political party. Unfortunately, there aren't many cities like that in the US. Fort Worth, TX, Arlington, TX, Jacksonville, FL, Oklahoma City, and maybe Indianapolis and Colorado Springs are the only ones I can think of right off hand. I haven't checked to see if condos in those cities are cheap right now.
 

NoMoreTO

Ostrich
Just as info for anyone who wants a really easy, Excel / data-based way of looking at whether their local market is hot or not, over-saturated or not, prices rising or falling, simply use Realtor.com's weekly or monthly aggregator data for your local zip, county, state, metro, or national. I find there's no need to really pay attention to a lot of these speculation articles when you have easy data to play with, as long as you can make sense of what the column headers are telling you. Great way to quickly analyze new real estate markets numerically https://www.realtor.com/research/data
Good idea. They don' seem to have it up in Canada. It's good to know a realtor too, who can fill you in on the actual prices things are being sold for after they close. Tell you some of the anecdotes of the bidding process.

I spoke to my mortgage rep at the bank recently, she explained that they weren't seeing particularly high volume of sales, but often for farms, multiple applications on the same property.

Stay in touch with people "in the know".
 

aynrus

Pelican
US real estate market for single family homes is brutal for buyers right now - historic worst market, and it's all over the country, even in states where previously no one wanted to move to.
It's a lot worse than summer and fall of 2020 as inventory is at historic low and tons of buyers looking to buy outside the cities, at the same time.
Inventory had been literally cleaned out and things sell pre-market or within hours with multiple offers even in remote towns where they used to sit for a long time just 2 years ago.
 

aynrus

Pelican
Homes in my region increased in price by at least as much money as I was able to save in the past year by living at my father's home rent free while he was overseas (My wife and I did major renovations to the home with his money in exchange for living there). I make good money for someone my age. If I can't save faster than home prices go up, what can I or should I do? I have plans to live with my mother in-law the next year but will be paying her rent ~600/mo. It's really disheartening that as an adult who doesn't waste my money, has a good job, saves everything I can, that home prices are ballooning faster than I can save. My only expenses now are 600 for rent, car payment and insurance. That's it. My wife and my phone plans are covered by our parents and we have no subscriptions. I can't get around this by buying a fixer-upper. Even they went up in price by tens of thousands in my area. Do I just give up and wait for a crash and stick with family in the meantime? I'd love to get one of our parents to agree to just flee the area with us, because it is definitely not safe a safe area if Officer Chauvin is found not guilty.
And even fixer uppers get tons of investors" pounce on them the moment they go on the market.
I've just seen a total, unlivable fixer (more like a tear-down to me) in a remote area with no services (and no jobs of course), long drive to anywhere out of middle-of-nowhere, no wired internet, in extremely high wildfire risk zone/so hardly insurable, get 4 offers within 1st day on the market.

At this point, if anyone cared about keeping society from falling apart (they do not), there would be a waiting period on any house sale to allow only potential primary occupants to make an offer - and if they didn't sell to a primary occupant in 3 months they can sell to all the vultures they want. This is how it roughly works with Fannie Mae foreclosures/"First look" (at least used to), but there're hardly any foreclosures now. Regular Joe has hardly any chance right now - all the connected vultures (connected with realtors) will get it pre-market or will put an offer over the asking price and sight unseen before Joe finds time off work to see the house.
 
So what happens if the price of gasoline/electricity doubles or triples? And when infrastructure investments are targeted to metro areas only?

The central planners could rope all these deserters right back into the urban cores by making it impractical to live anywhere else
 

aynrus

Pelican
So what happens if the price of gasoline/electricity doubles or triples? And when infrastructure investments are targeted to metro areas only?

The central planners could rope all these deserters right back into the urban cores by making it impractical to live anywhere else
Another thing about roping back - I heard that US employers are telling people to come back to offices. Even in occupations where you'd expect remote work as a given, IT/software. I did a random scan of job offers in software field, expecting most to be fully/permanently remote and there was not much that was advertised as remote. Some said temporarily remote, others had nothing about it at all - I'm sure they're still remote now, but probably won't be for long. Most likely, those corporations can't wait to get the sheep back into their pens.
 

DanielH

Pelican
At this point, if anyone cared about keeping society from falling apart (they do not), there would be a waiting period on any house sale to allow only potential primary occupants to make an offer - and if they didn't sell to a primary occupant in 3 months they can sell to all the vultures they want. This is how it roughly works with Fannie Mae foreclosures/"First look" (at least used to), but there're hardly any foreclosures now.
That's a great idea for a law. Hard not to be upset when most of the boomers I know own multiple homes and properties and it seems like society is geared towards pricing the youngest generations out of existence (unless you're brown).

US real estate market for single family homes is brutal for buyers right now - historic worst market, and it's all over the country, even in states where previously no one wanted to move to.
It's a lot worse than summer and fall of 2020 as inventory is at historic low and tons of buyers looking to buy outside the cities, at the same time.
Inventory had been literally cleaned out and things sell pre-market or within hours with multiple offers even in remote towns where they used to sit for a long time just 2 years ago.
Friend of mine just rented a very small pre-fab home on maybe 1/8 acre in a rural area for $1900/mo. He called the realtor the very minute it was listed on zillow. Within one day they had almost 40 offers. They originally asked 1800, he got it by offering 1900.
 

aynrus

Pelican
Homes in my region increased in price by at least as much money as I was able to save in the past year by living at my father's home rent free while he was overseas .... I can't get around this by buying a fixer-upper. Even they went up in price by tens of thousands in my area. Do I just give up and wait for a crash and stick with family in the meantime? I'd love to get one of our parents to agree to just flee the area with us, because it is definitely not safe a safe area if Officer Chauvin is found not guilty.
Is building an option for you?
Most builders are very busy now/hard to get anyone, especially reputable/good, and materials went up in price, but building something small and modest might be a better option than waiting for market to ease. Especially if you can work on some of it yourself.
Another option is to temporarily drop a small mobile home on land, and then use it as a waiting base, while building or while waiting for the market to improve for buyers.
 

DanielH

Pelican
Is building an option for you?
Most builders are very busy now/hard to get anyone, especially reputable/good, and materials went up in price, but building something small and modest might be a better option than waiting for market to ease. Especially if you can work on some of it yourself.
Another option is to temporarily drop a small mobile home on land, and then use it as a waiting base, while building or while waiting for the market to improve for buyers.
I think this is a viable route. We are surrounded by so much urban sprawl, and what surrounds that is so expensive, that any land we could buy would separate us from family to a degree, but it's increasingly looking like we'll have to make that move if none of our family wants to escape the local governments and third world hordes that hate us. I was actually just looking into this option earlier today. I need to do some research on how that process would work with utilities and zoning.
 

tomzestatlu

Kingfisher
What makes you guys think, that it´s some kind of bublle, thats gonna burst?

As I mentioned in previous posts, I live in different environment, but very similar situation with the market.

During last few years, property prices skyrocketed. And I am talking about hundreds of percents. At first, it reach it´s top in the major cities and now it´s spreading to the rest of smaller cities. Villages and towns around cities are experiencing the same rises. At this moment, if you want to build a house, land will cost you much more than actual house.
I believe, that prices may slown down, but I don´t see any bublle here. People need places to live and this is the need, that never disappears.
A year ago it was believed, that corona will push the prices down, but since then, prices have climbed up dozens of percents (somewhere even more than 50%). The same, it was believed 2 or 5 years ago, that prices will go down. Some people lost their chance to ever own anything, while they were waiting.
There´s just too big demand and small offer. For every flat there are dozens of buyers and they are trying to bid out each other with higher offers or cash. Someone from this market told me, that once a developer builds apartment block with dozens of flats, one investor can buy half of flats immediately. The rest is also sold rapidly and we are speaking about timefrime even years before they start to actually build it. And statistics say, there are less and less apartment blocks built and less building permits given by authorities.

In major cities, rents went down, because AirBnB stopped working and students left, but it didn´t make prices go down. There´s situation, that mortgage monthly payment would be much higher, than paying a rent. Someone could think, that it might stop the prices but no. Thanks to privatisation of flats and land (which happened after revolution from communistic system), a lot of people bought it for cheap and now it has made them wealthy class (also together with foreign investors). They can buy these flats, because they have got money sitting on their bank accounts and properties will always be the best place to put the money in. In a long-term, they will always be winners and there simply isn´t any other option, what to do with money.
There are few more factors determining prices:
- It´s extremely difficult to start building from bureaucracy point of view (and it´s very long process)
- There´s less and less land
- Families are more atomized and much more people live alone (single life in small flat - you need much more of flats)
- While people go away from big cities, these´s stable income of new citizens to those cities - students to universities (education is free and majority of people go to uni) and foreigners to work in corporations.
- Except low income people and people working in services, people actually saved money during corona (they couldn´t spend it) and more young couples are trying to get a mortgage

And finally, people are much more financially aware. Previous generations didn´t care about this too much, because they had opportunity to live life-long in flats rented by state for regulated rent (very favorable). At this moment, young people don´t have such opportunity and there´s zero support from state.
Also, those who have multiple properties (let´s say they have inherited it or got it from their family), will never have reason to sell it (unless rare exceptions). They would rarely need that much cash and they could satisfy their material needs with average income, because they don´t have to pay rent and also, they have got side income from renting other properties.
 

bucky

Ostrich
Haha ok big guy, you must be fun at parties
I'm kind of with you. I'm Gen X and managed to buy a house before the real estate market exploded, praise the Lord, but for the younger generations marrying into a good family that already owns several properties looks like an increasingly good option. Why not, if you can pull it off. The nice, free world of abundance and opportunity for everyone that existed in the West when I was a young man is rapidly fading away like the historical anomaly it is as the Anglo-Saxon and other western European populations that created it are increasingly demonized and increasingly fail to reproduce.

There's still opportunity out there, don't get me wrong. I have millennial colleagues who are doing as well or better than me, but they're the exceptions.

On the other hand, who knows. @tomzestatlu said:

they have got money sitting on their bank accounts and properties will always be the best place to put the money in.

This could be right, but I've got a cousin who bought like five different properties a few years before the 2008 crash using this logic. He was absolutely wiped out, bankrupt when the crash hit and his marriage didn't survive either. So who knows. No one really knows what's coming.
 

aynrus

Pelican
I think this is a viable route. We are surrounded by so much urban sprawl, and what surrounds that is so expensive, that any land we could buy would separate us from family to a degree, but it's increasingly looking like we'll have to make that move if none of our family wants to escape the local governments and third world hordes that hate us. I was actually just looking into this option earlier today. I need to do some research on how that process would work with utilities and zoning.
You probably want to get out of urban sprawl zone now anyway. If these concerns about vaxx pasports turn out to be valid, one would want to have food independence to avoid the need to enter grocery stores for fresh stuff (and the rest can be bought online in bulk). If you buy land to build on outside the city, you can get enough for gardenining and even animals (usually need at least 1 acre by zoning requirements to keep even 1 head of livestock, can keep 1-2 on an acre without problems but for more need more land. Some towns consider domestic fowl to be livestock). Land with utilites available is usually advertised as such, and connection to them is normally very cheap if you have a line going by the property line. Most land sold now comes with covenants and restrictions (deed restrictions/subdivision covenants), you want to read those too, not just zoning, to make sure they don't prohibit animals or don't require big minimum square footage house - unless you're lucky to find unrestricted land.
 
We scheduled to see five properties Wednesday afternoon in what would typically be less desired areas far outside major metros. Thursday morning, all but one were already gone. I only thought one of the properties was really attractive; the others were under-par. Several went above asking even though they were definitely not worth even asking price. I'm not big on buying properties without at least a brief walk-through so I can see what I have to work with and what future potential looks like.

What makes you guys think, that it´s some kind of bublle, thats gonna burst?

I'll say it again and again: if you walked into your grocery store and saw 60% less food on the shelves, prices going through the roof, and a very emotional crowd freaking out...you wouldn't say, oh this is a good place to shop! IT'S A SELLERS MARKET!!!!

No. You're seeing a possible total failure of a market even as morons think the price can only go up forever because that's all they know. There's no liquidity and so you're seeing extreme price increases but also disconnections in the spread between the price. I'd go so far as to say they might put this in the history books as one of the key indicators that the US was rapidly collapsing and future students will scratch their heads at how many of us couldn't see it.

Most builders are very busy now/hard to get anyone, especially reputable/good, and materials went up in price, but building something small and modest might be a better option than waiting for market to ease.

I have very little experience building but we're considering giving it a go. Maybe. I read a few articles on what to do...but I was still like, this seems like a lot and I don't know where to start and how not to get totally screwed. I've seen people get screwed with properties that fell apart within a decade after being built. These friends also had construction experience (but there were sometimes design problems).

Any advice?
 
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