Real estate thread

C-Note

Ostrich
Gold Member
Do you think the mainstream disinterest in downtown condos is because of the virus and teleworking or is it because of a subconscious need to prep and be further away from urban chaos? If the former then the market should die down soon enough, if the latter then things may never equalize.

With vaccinations and gradual return to normal will the appeal of the suburbs go down, even if the long term threats to social stability remain?
It's both. A large percentage of urban office workers are liberals and they're expecting to be mainly teleworking from now on, so they're looking for a more pleasant, comfortable house to do it from. Also, many of them are terrified of the virus, so they want to move to an area that is less densely populated. They would never admit it, but the rise in crime, chaos, and taxes in Democratic-run cities is also a factor.

Yes, I believe that liberals will eventually return to their gentrified neighborhoods in city centers, unless they can create those kinds of neighborhoods in the suburbs. The restaurant/bar/lounge/arts lifestyle is really important for these liberal types, especially the gay ones. They say they want to be surrounded by "diversity," but really what they mean is they want an active social, hedonistic life among other like-minded liberals. If the lawlessness and virus restrictions in liberal cities continue, then I would expect liberals to start creating Portlandias (probably in the style of hipsterish town center living and shopping areas) in the suburbs. If that occurs, then urban city centers will become ghost towns.
 

tomzestatlu

Kingfisher
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.
Let´s say I have had more opportunities to "settle" with a girl coming from wealthier family. And I am not saying I wouldn´t accept such girl only as a protest or demonstration of my manliness. On the other hand, I can´t build relationship on that and choose my life partner based on how wealthy her family is. That´s what I wanted to say.

I live in different real estate market than US, but if some big crash is going to happen, it will certainly influence all the markets world wide, as recently. But I read some prognosis from people in market and it mostly says, that there might be price stagnation or some decrease in prices in near future (next few years), but not very dramatic (let´s say 10%) and it will hit mainly older apartments in communistic tower-blocks and less attractive areas. While prices of houses and land shouldn´t be dramatically touched. And I pretty much agree with this and stick with this prognosis.

And even though, there might be some more serious crash (as some guys in this thread mentioned), buying a property isn´t short-term thing (or investment if you want), unless you are flipping houses for profit. That means, if you buy a house/flat and just next year, there will be some serious downturn, 20 year later, when you pay off your mortgage, it won´t be relevant, because the value will be probably much higher. It has been like that and always will be (unless some certain location turns into ghost town or gang slum).

As I mentioned in my previous post, situation on real estate market in my country is totally ridiculous. Definitely some cool down is necessary. Prices were constantly wildly rising up for years and last year, government lowered down law requirements for getting mortgage. The main advantage of this move was probably lowering necessary downpayment from 20% to 10% and also cancelling 4% tax for "starting to own a property". This was actually big move, because even 10% of price of some cheaper property (smaller flat) equals more (might be much more) than year netto sallary and it´s pretty difficult to save such money for young person with current cost of living. And to save twice as much (20%) is almost impossible.
This move, together with cheap mortgages stimulated buyer side even more and demand is really huge.
I don´t know what was situation in US before crash, but I can say, that bar for getting a mortgage here is still pretty high for many people and they are not giving it to anybody. Banks are actually quite selective and that support stability of the system.

So I am between those, who used this opportunity, even though I have to move to not very attractive location in smaller city, because I can´t simply afford anything else. I am really surprised, that I got lucky to be the one being sold that flat, because there were dozens of people interested in buying it. I have been looking around for longer period and talked to more real estate agents, so I knew once I decide for something, I have to be really agressive and go for it. Also I am lucky that I ran into fair real estate agent, who kept his word.
I´am pretty much sure, that after 5 years of interest fixation expires, it will go up. But still I have made a financial decision, which is not going to totally ruin me of money and there´s still some space in my financial options for paying more.
I don´t have time to wait for some potential crash, that might happen, but doesn´t have to. I am getting near to be 30 years old and banks won´t give me 30 years mortgage, when I will be 40 years old. And the predictions say, that even though I might wait for some little downturn, I will pay more on interest rate anyway. Situation for me isn´t ideal (generally it sucks pretty much for my generation), but I couldn´t do this move 5 years ago and wait another 5 years might steal my chance to ever own anything, because the entry bar of ownership might be much higher. So I´m taking my chance and also a risk.

I believe, that people owning real estate (whether they´re living in it or just investing) will never have the reason to sell, unless they get into existential crisis (which is less likely to happen in large scale, because system is very stable) or they use the cash to buy another real estate property. Imagine situation years before, there wasn´t such demand and people didn´t realize it´s importance in context of what´s happening in the world. Also they weren´t so financially aware, didn´t know much about investments and didn´t live in challenges of today.
Today, everybody has internet to be well informed, there´s endless stream of information on this topic and everywhere (social media) you are convinced that RE is best investment (it is). And everybody sees, that dollar is dead and stocks and metals are manipulated.
And I will say once more - lifestyle of people is changing and more and more people are living alone or in smaller groups (smaller families), so there´s need for much more apartments, than ever before.

Maybe there was some possibility to invest on your savings acount in bank before (I don´t know, lets say at least 5%?), but nowadays it doesn´t even cover inflation (which will be bigger and bigger in my opinion in the future). So what´s left today?
Stocks - that are nearing it´s peak for long time and the industry you are investing in can literally end from the day to day.
Crypto - it can provide you with nice gains, but it´s risky and once you save ammount of money, you don´t want to invest all in crypto. And also the most of the people simple won´t invest in it, at least in near future.
Real estate - from long-term view, it´s only gaining value. And most importantly, it provides actual value and it´s important for every person on this planet. 50 years in the future, there might be no stock market, but definitely people will need a roof over their head. It isn´t influenced by political system and unless half of the human kind will be wiped out, there will be demand for that.
 

aynrus

Kingfisher
It's both. A large percentage of urban office workers are liberals and they're expecting to be mainly teleworking from now on, so they're looking for a more pleasant, comfortable house to do it from. Also, many of them are terrified of the virus, so they want to move to an area that is less densely populated. They would never admit it, but the rise in crime, chaos, and taxes in Democratic-run cities is also a factor.

Yes, I believe that liberals will eventually return to their gentrified neighborhoods in city centers, unless they can create those kinds of neighborhoods in the suburbs. The restaurant/bar/lounge/arts lifestyle is really important for these liberal types, especially the gay ones. They say they want to be surrounded by "diversity," but really what they mean is they want an active social, hedonistic life among other like-minded liberals. If the lawlessness and virus restrictions in liberal cities continue, then I would expect liberals to start creating Portlandias (probably in the style of hipsterish town center living and shopping areas) in the suburbs. If that occurs, then urban city centers will become ghost towns.
One can just travel to wast rural landscapes of North-Western California to see it, former city liberals had taken over the entire region long time ago(and it had been weed-growing region for a long time). If you go to many other rural areas in California, Nevada, Arizona, New Mexico, Colorado, Washington, Vermont and other New England places you can these formerly very conservative areas having tons of liberals, masks on everyone, certain types of establishements they like in towns, etc. Just the expansion of gentrification to outside of the cities/suburbs. I would not expect them to just easily go back once they had ventured out of their cities.

Even if they move back to the city because their employer cuts off remote working, they can keep that house as a 2nd home, airbnb or rent it out long term. There's real shortage of housing in the States, and it's very severe in some of those rural locations, where it's hardly possible to rent anything at all, plus airbnbs are springing up, so they can always just turn it into a rental. To reverse the trend, it'd take major economic downturn with money not being printed to really reverse this, I think.
 
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Yes. Farms in region of Ontario have been being bought more and more by corporations. In Manitoba, corporations are buying up huge swaths of land. The Teachers pension fund here in the province is known for being quite saavy and are now buying up farms.

A farmer explained it to me:
- Typical Return on Investment for a Farm is 1.5-2.0% (not including capital gains)
- The typical individual buyer takes on a mortgage at 3.5% interest, meaning that he has to gap the difference by either supporting the investment with other farm income, refinancing older farm properties, or off farm income (job).
- Investment funds already place large amounts of money in low risk asset classes, government bonds would be an example, yielding only 2% in many cases, but secure. They simply sell these and put them into farmland - CASH.
- On the other hand you have ETFs which when people buy, they basically just have to go out and allocate the funds into farms - further pushing the prices up.

I don't think we'll see a squeeze on real estate, but the WEF promise of "you'll own nothing and be happy" does linger in the background. To me that is how they would do it, just make housing so expensive no one can buy one. Then tax the properties upon death so that they children are almost unable to purchase. We are seeing this in farm real estate in the US with Joe Bidens pushing of "unrealized gains".

Any recommendations as to ETFs on agricultural land / farmland to hedge against coming inflation? Can't afford to buy a farm property directly so I guess ETFs are my next best option - was looking into the iShares COW ETF (agricultural) but was wondering if there are any others out there to consider?
 

NoMoreTO

Ostrich
Any recommendations as to ETFs on agricultural land / farmland to hedge against coming inflation? Can't afford to buy a farm property directly so I guess ETFs are my next best option - was looking into the iShares COW ETF (agricultural) but was wondering if there are any others out there to consider?

Honestly not sure. I've never bought one.
 


Obama 2.0 housing policies will influence housing dynamics, picking winners/losers and strong arming communities to cede their authority on housing to the Federal Government

As one of the WSJ commenters states, the WSJ basically just packages up White House press releases into an article.

Marc Zandi, a 'subject matter expert' for the far left pretending to be a neutral economist, disguises his paper with reasonable data analysis but then jumps right into recommending communist wealth redistribution tactics without any evidence to back up the efficacy of these policies or the side effects that would occur.

From Zandi and Parrott (former Obama housing advisor),

"Policymakers can do this by conditioning some of the considerable federal aid they provide to local governments on a commitment to make their communities more hospitable to the construction of affordable housing."

"Another candidate is transportation funding. One of the costs of local decisions that limit affordable housing is that it forces those of modest means to commute longer distances, putting a strain on roads and highways; it makes sense to reward those communities with policies that make it easier for people to live near where they work."

"Policymakers could provide additional incentives by offering competitive local housing innovation grants to state and local governments that make their land-use policies friendly for building affordable housing."

"In particular, policymakers should send more funds to the Housing Trust Fund and the Capital Magnet Fund, which provide grants to preserve and produce affordable housing for low- and very low-income households,10 and expand the Low-Income Housing Tax Credit, section 142 tax-exempt bonds for the development of rental housing, and the New Market Tax Credit, each of which has proven effective in promoting development in underserved communities."

"Developing an effective education pipeline into the trades will take time, so over the near term the Department of Labor should scale up the number of H-2B visas available to foreign workers who commit to working in these sectors."

"Most pressing is settling the ongoing trade dispute with Canada over softwood lumber. This dispute has persisted for decades, leading to a significant underinvestment in capacity by Canadian producers. If the U.S. were to signal a clear and lasting end to the tariffs and the trade dispute, investment would increase quickly, capacity would soon follow, and prices would eventually moderate. An easing in the trade tensions with China would also help ease the cost of other critical building materials."
 

Roosh

Cardinal
Claim: all those cash buyers are really banks.
Around 6 months ago someone on 4chan who claimed to be working in some sort of finical institution was claiming that banks or hedge funds were using the insane of amount of money that the fed gov was granting to them to buy single family homes.

While reading the comments on unz today, I came across this. Comment number 41 on "Coordination and Decomposition" by Gregory Hood.

I wrote a few months ago about the bizarre disappearance of affordable, middle class homes in white rural neighborhoods.

A house would appear on the MLS, and within 8 hours…it was Under Contract.

This was happening in West Virginia- a stalwart of white values and no BLM criminality would be tolerated. I wrote that something was afoot and it was frightening.

It is Black Rock.

Black Rock is buying up homes by the thousands. The average earner cannot compete as they are paying cash, and 20% over the asking price.

This is a HUGE story, with catastrophic consequences, aside from making home ownership completely unattainable for most white working class.

What is Black Rock going to do with these homes?
I have been wondering how so many people seem to have hundreds of thousands of dollars on hand.
 

tomzestatlu

Kingfisher
If you think real estate prices can´t grow up forever, here is a curiosity from abroad.

At this moment I live in village just next to major city of this area, it´s only few kilometers from official border of the city.
There are some new houses for sale. Nothing special, only ground floor, 3 bedrooms and tiny garden.

The price is $600 thousands. In a country, where average salary is $12-15 thousands per year . That means that person earning average salary would have to work 50 years to get this house without spending single dollar.

Ridiculous.

2021-03-10%2014.31.06.jpg
 
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aynrus

Kingfisher
There're lots of people with cash on hand in the US right now. If a rural house is listed for 150K (which is fairly typical price for West Virginia) it's literally nothing for many from big cities looking to get a rural property. A lot of people get paid 200-400K a year, but 150K cash is managed by much lower earners, especially on dual income.
 
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NoMoreTO

Ostrich
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.

It's a tough situation. You could see if your parents will cosign the mortgage and back you up on the house. In many cases the older generation has alot of equity and really needs to help the younger generation to stay in the real estate market.

I really don't know what to suggest with respect to price and where it is going. Sticking with the parents and living cheap might be your only option, Patience is a virtue but it seems those who take on huge loans irresponsibly are winning.

Remember MORTgage comes from France, where people would die carrying the loan. MORT
 

westernman

Sparrow
I think the implementation of UBI unemployment gives cover for this housing buy up


If you were 25 and had... 50,000 cash, right now, What would you do with it?
 

NoMoreTO

Ostrich
I think the implementation of UBI unemployment gives cover for this housing buy up


If you were 25 and had... 50,000 cash, right now, What would you do with it?

I'd buy a monster box of 500 - 1oz silver coins. That'd be litter over 15K USD. See you on the silver squeeze thread.

Monster Box

The rest you could put into crypto, hard assets, things that you could use to earn money, and keep some FIAT in case you're in a pinch.
 

NoMoreTO

Ostrich
Canadian Housing has "Hottest Month Ever"
But even with a surge of new supply, the average selling price of a home in Canada hit a new record at $716,828 in March, rising 5.7 per cent from a month earlier.

This goes with my friends prediction about a month ago, that supply would come on with prices this high. Still no abatement in the price, must be all the Trudeau bucks and diversity loans.

National Post - Hottest Month Ever
 

Dr Mantis Toboggan

Kingfisher
Gold Member
The "cash buyers" are a combination of a few things:

-Real estate investing corporations straight up paying cash with the intention of turning the house into a rental
-Individual buyers pre-approved for a mortgage up to X amount which effectively puts them on close to equal footing with actual cash buyers (since the seller isn't risking that their financing will fall through on the strength of the buyer's credit alone, although there is still risk it will after appraisal)
-People selling their $1m house in NY, CA, etc and offering to pay cash for a $350k house elsewhere (if they're smart they'll then immediately refinance to get most of their cash back at low interest rates)
 

aynrus

Kingfisher
The "cash buyers" are a combination of a few things:

-Real estate investing corporations straight up paying cash with the intention of turning the house into a rental
-Individual buyers pre-approved for a mortgage up to X amount which effectively puts them on close to equal footing with actual cash buyers (since the seller isn't risking that their financing will fall through on the strength of the buyer's credit alone, although there is still risk it will after appraisal)
-People selling their $1m house in NY, CA, etc and offering to pay cash for a $350k house elsewhere (if they're smart they'll then immediately refinance to get most of their cash back at low interest rates)
There's also a lot of people with just plain liquid cash right now and without 1M house in big cities, including people who've been renting in these metros or living with parents while holding high-paying jobs.
 
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Dr Mantis Toboggan

Kingfisher
Gold Member
There's also a lot of people with just plain liquid cash right now and without 1M house in big cities, including people who've been renting in these metros or living with parents while holding high-paying jobs.

Yeah, true. Not so much the renters (that eats up just as much of your paycheck as a mortgage if not more) but people living with their parents for years after college for sure.
 

aynrus

Kingfisher
Yeah, true. Not so much the renters (that eats up just as much of your paycheck as a mortgage if not more) but people living with their parents for years after college for sure.
If you make around 150K in a big city, which is pretty ordinary professional salary now (100K is like minimum wage in those, in SF Bay area 120K is considered minimum wage making one eligible for rental assistance since years ago), and you pay, say, 40% in taxes, you are still left with tons of money on hand to save. A lot of professionals are renting rooms in cities further reducing expenses. Buying 150K cash rural house in WV, Midwest or South to work from home as they're able to now is no big deal for such person. You mentioned 350K - it's really "luxury" or city homes that sell for this in many of these states, rural homes with some land cost around 150K-200K (homes in small towns can cost a lot less). If that big metro renter was sitting on 150-200K saved downpayment for jumbo mortgage (jumbo mortgages are around 20%, I believe), they might have just bought rural cash house instead last year.
 
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Deepdiver

Crow
Gold Member

I'd buy a monster box of 500 - 1oz silver coins. That'd be litter over 15K USD. See you on the silver squeeze thread.

Monster Box

The rest you could put into crypto, hard assets, things that you could use to earn money, and keep some FIAT in case you're in a pinch.
Thank you for the Kitco Canadian mint 1oz monster-box link .. Silver melt value $25oz and reputable local dealers I was buying US 1oz silver eagles about 100 plus and about 20 lbs of pre 1964 ms63 to ms65 silver coins at about $16 to $20oz silver weight per oz makes me look prescient now as 1oz US Silver Eagles selling for a whopping $42 each yes a $10 distributor commission plus $7 dealer commission per coin... Supposedly due to U.S. Mint shutting down all but one production line due to NY State covid-protocols. Looks like an opposite supply issue with Kitco Canadian Mint 1oz silver maple leaf coins... I have a few Canadian .999 pure 1$ maple leaf and a few 1oz .9999 pure $5 Canadian coins... Assume the monster box is .999 pure 1oz maple leafs... Now to monetize my collection with ETH based NFTs adding a few CAD maple leaf monster boxes to the mix.
 
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