Real estate thread

aynrus

Pelican
Every bubble burst has been preceded with "This time it's not a bubble," without exception. I do think it's less of a bubble than 2008, but these price increases can't last unless Blackrock tends to buy up the entirety of American inventory.
They've been saying "it's not a bubble" for years now though, in published articles. I don't think the prices are ever going down, they're simply reflecting devalued green paper right now. Increases should slow down and inventory should increase, but there's very real shortage of housing - too many people, too few houses, very real supply and demand situation and I don't see it resolving soon.
This article is right on:

BlackRock isn't much of a factor in price dynamics, they're focusing on and are really affecting few local markets only (certain growing cities...who wants to live in those anyway?). It's a myth that investors are buying things up to the point of primary occupant buyers are being squeezed out - on a country-wide scale (it would be a factor in few metro markets such as Houston) - there's real shortage and huge demand from people who need a place to live and tons of renters and mom's basement dwellers competing for houses right now. In California, tons of people living in RVs trying to buy, also. Outside of those big city markets, investors are focusing on truly distressed properties, mostly.

I wouldn't wait and bet on market easing significantly to the point of real price declines - by then one will lose a lot more money to inflation and rent. And if they're not a cash buyer, they might be buying at much higher interest rate, also/more loss.
 
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Roosh

Cardinal
Orthodox
They've been saying "it's not a bubble" for years now though, in published articles. I don't think the prices are ever going down, they're simply reflecting devalued green paper right now. Increases should slow down and inventory should increase, but there's very real shortage of housing - too many people, too few houses, very real supply and demand situation and I don't see it resolving soon.
This article is right on:

BlackRock isn't much of a factor in price dynamics, they're focusing on and are really affecting few local markets only (certain growing cities...who wants to live in those anyway?). It's a myth that investors are buying things up to the point of primary occupant buyers are being squeezed out - on a country-wide scale (it would be a factor in few metro markets such as Houston) - there's real shortage and huge demand from people who need a place to live and tons of renters and mom's basement dwellers competing for houses right now. In California, tons of people living in RVs trying to buy, also. Outside of those big city markets, investors are focusing on truly distressed properties, mostly.

I wouldn't wait and bet on market easing significantly to the point of real price declines - by then one will lose a lot more money to inflation and rent. And if they're not a cash buyer, they might be buying at much higher interest rate, also/more loss.
I wouldn't believe anything The Atlantic says. Maybe Blackrock and other hedge funds "only" owns 300,000 homes, but that's a huge number, potentially impacting 1 million plus people. The article is clear misdirection away from the oligarchs. Imagine 300,000+ homes on the market right now with no hedge fund buying it. That would have a measurable impact for families looking to buy, across the entire country. And that number is growing rapidly as we speak.
 

aynrus

Pelican
I wouldn't believe anything The Atlantic says. Maybe Blackrock and other hedge funds "only" owns 300,000 homes, but that's a huge number, potentially impacting 1 million plus people. The article is clear misdirection away from the oligarchs. Imagine 300,000+ homes on the market right now with no hedge fund buying it. That would have a measurable impact for families looking to buy, across the entire country. And that number is growing rapidly as we speak.
But what I see for a long time matches what The Atlantic says. I've been looking at the rural markets country-wide for a very long time. BlackRock is focusing on certain big growing city Houston-type markets, where they have a big share and are affecting prices/availability. In most of the US, BlackRock isn't a factor and is unheard of. I never seen competition from any investors, even small ones, in most places and I talked to realtors about who is buying things up - it's the local families (and starting 2020 New Yorkers, etc buying online sight unseen)... outside of those big upcoming city markets, investors tend to go after distressed homes most primary occupant buyers wouldn't want to touch anyway as it might be more headache than worth it at the end (bad fixers, problem drug tenants, insect infestations, asbestos, etc). I wouldn't want to deal with such homes, think buildng is a much better option. Investors often will just patch things up cosmetically with cheapest materials (while a primary occupant would want more thorough and expensive job) and move tenants into it.

Another thing The Atlantic is right about is draconian building regulations and hurdles erected by local governments, which is a single main factor creating this housing shortage (coupled with population increase). Housing shortage had been happening for years before the hoax, 2020 had merely escalated the existing process with interest rates hitting the lows and people rushing out of the cities.
 
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OrthoLeaf

Sparrow
Orthodox
I wouldn't believe anything The Atlantic says. Maybe Blackrock and other hedge funds "only" owns 300,000 homes, but that's a huge number, potentially impacting 1 million plus people. The article is clear misdirection away from the oligarchs. Imagine 300,000+ homes on the market right now with no hedge fund buying it. That would have a measurable impact for families looking to buy, across the entire country. And that number is growing rapidly as we speak.
Technocratic Neo-Feudalism is probably only a few years away. But don't worry, your new landowning elite buying up all the real estate insist that they are not buying up all the land and real estate.

These are the types of people who, being so drunk on power, would piss on you, while insisting they're not pissing on you. Then mock you for allowing them to piss on you all while forcing you to tell them that they're not pissing on you. Truly a disgusting people.
 

aynrus

Pelican
Technocratic Neo-Feudalism is probably only a few years away. But don't worry, your new landowning elite buying up all the real estate insist that they are not buying up all the land and real estate.

These are the types of people who, being so drunk on power, would piss on you, while insisting they're not pissing on you. Then mock you for allowing them to piss on you all while forcing you to tell them that they're not pissing on you. Truly a disgusting people.
So why doesn't average Joe not buy a few acres parcel and build on it? Land isn't that expensive even now and if someone does a lot of work themselves and is content with small square footage, building wouldn't be that crazy expensive as if done through a contractor and if building typical American McMansion (average new home square footage is over 2,5K sq feet right now)

The sole reason is codes/regulations enacted by local governments, enabled by the current home owners who want to jack up their equity and prevent new home construction.

Trying to build in states like CA....good luck, one will need a lot of it. Even many deeply rural Kentucky counties require 8-9 inspections to built. Only few states allow counties not to enforce building codes in rural areas, and few locations do that. They mostly still enforce other codes though, electrical, plumbing, HVAC, septic stuff (outhouses or composting toilets aren't legal in most of the US anymore), which means people hire licensed contractors to do the work. Most locations do enforce International building code full on (plus various envirornmental regulations), which is the main cause of reduced construction and high construction expenses. Many locations require a licensed contractor to do most of the work. Plus people are afraid of getting sued over injuries (because suing culture is enabled by the very governments they had elected), so insurance costs drive the construction costs further up, as they hire insured, bonded licensed contractors to protect themselves from all kinds of lawsuit or county/city fines - and these contractors all charge rip-off prices. Plus, there're minimum square footage requirements about everywhere you look now, requiring to build unnecessarily large homes (especially since many people are single now). Plus, most places have asethetic requirements for siding, appearance, etc, restrictions on mobile homes, require full foundations and ban living in RVs, yurts or tiny houses.

It's easy to point fingers at those investors, but the real enemy is right there in the city hall or county adminstration building. Pointing at investors seems like a distraction from the real problem (though investors allowed to own unlimited number of homes are a problem too).
Anyway, this is Capitalism and free market, dog eat dog. If you want to restrict investors...welcome to Socialism - the irony.
 
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FactusIRX

Kingfisher
I'm still in the market looking for a property, and I'm noticing a few things. Properties are staying on the market longer, but they are still being listed nearly 100k over a year ago. Sellers are trying to capitalize on the outliers of March-June, where they will base their sale price on comparables from this time period, rather than sales occurring outside of this time period. The question is whether there are still enough panicked suckers willing to pay 100k over, or whether the vaccine has satiated the normies enough to wait for the prices to cool down.

Another unknown is what's going to happen in the fall. It's becoming fairly clear that new "variants" are going to emerge and kill the vaccinated on large scales, as their immune systems have been severally compromised. That's going to trigger even harsher lockdowns, which will, of course, cause government to print more "aid" money, leading further to inflation. Will those decisions spark a second "panic" where prices shoot up again, even higher than this year? Or, will the bubble finally burst. Will the combined effect of hyper inflation with the devastating shut downs on small businesses and the labour market finally cause a crash, forcing higher interest rates, which would lead to the vast majority of people going under and defaulting, triggering a housing crash?

We also know the elite do not want people to own anything. Hyperinflation is good for the elites as it prices the vast majority of the middle class out of the housing market. However, a complete crash would likely work better. It would send a record amount of people out of their houses through foreclosure, which will likely trigger another bailout (good for business) and cheap property for Blackrock and Bill Gates. A crash of this magnitude would also likely result in a demand for UBI as the labour market collapses. Once UBI is implemented, they can tie that entitlement to vaccination, which would allow them to track and manage a large amount of people completely dependent on the government. The rest of people that still had jobs would likely have such immense pressure to be vaccinated due to the decimated labour market, and the large death count from the immuno-compromised slaves. Anyone resisting vaccination at this point would likely be small enough to be a non-issue, or just be sent to jail.
 

cosine

Robin
The average price of a single-family home bought in Aspen in 2020 was $10.38 million, 47.5% higher than the $7.25 million average in 2019.

Median price is just under $10M in January 2021.

The 16.6 teachers at the Aspen Community School, which is part of the district, averaged $46,895 in pay for 2018-19.

I don't think teachers should be paid some amazing wage -- they work 8 months out of the year. Also kind of funny how they consider .6 of a teacher, I'm sure they are part-time but that's still chopping a person into pieces. But, it makes me question how people with traditional jobs(police, firefighters, EMT's, etc) supposed to live anywhere nearby. Even a teacher with a master's and 6 YOE makes just under $50k. At least private trades like plumbers will simply be in short supply so rich people will just have to pay through the nose for simple jobs. Even many patriotic defense contractors like Lockheed will struggle with housing soon.

We have a thread about BlackRock purchasing single-family homes across the US, but Zillow and Redfin are doing the same. I also have a friend working at a tech RE startup that is doing the same exact thing -- they are buying homes, rent them to rent-to-buy clients, and then eventually sell. They make a killing off the debt-fueled appreciation and are using data to argue with appraisers.

This makes me think more and more that the only possible jobs for young people are ones that are tied either to assets or to inflation-resistant industries. Real estate, healthcare, finance. The other solution is tech.
 
The average price of a single-family home bought in Aspen in 2020 was $10.38 million, 47.5% higher than the $7.25 million average in 2019.
The roaring fork valley is bizarre in many ways. If you ever drive into Aspen in the morning rush hour, it is at least 50% illegal migrant workers commuting for service jobs in Aspen. Many are 3-4 per truck and the women seem to prefer to take the bus. You can stop at a burrito truck along the way to get a taste of who is finding work in Aspen. Aspen is an elitest enclave and they are not interested in creating housing for their workers, who must disappear themselves outside of the elite periphery at the end of each work day
 

Max Roscoe

Pelican
Orthodox Inquirer
I am going to make a statement which seems absurd. I don't like it, but I do believe it is true.
Housing prices today are TOO LOW.

I have been trying to understand this weird phenomenon of houses selling in a matter of days or hours, not weeks or months as they should. Along with the phenomenon of people cold calling homeowners to see if they want to sell. And houses selling at above asking prices. None of this makes any sense, and when you see inefficient and illogical market activity like that, only explanation, according to economic theory is that prices are too low. That seems absurd, but I did test the theory and find it true.

I am happily debt free, and don't really follow things like credit scores and interest rates that closely. I knew interest rates were low. I didn't realize they were at ALL TIME lows (really, I just thought they have been abnormally low for a decade and didn't realize they were dropped significantly in 2020).

Screenshot_2021-07-28_21-45-01.png

I calculated the effect of this interest rate drop and was astounded.

I was looking at a house that just sold for $375,000 in 2009, and now the sellers are wanting $675,000 for it.
The difference in price was $300,000. This seems like a huge increase, but as you can see below, the cost is essentially unchanged if you are financing the purchase with a mortgage.

The "subsidy" the government is providing you via below market interest rates is $305,000.
100% of the price increase can be explained by the interest rate cuts.

Mathematically, this is proven by comparing a conventional 80% mortgage loan at 2.5% versus a more typical 4.5% (which is still below market but was more typical in this century):

$540,000 loan at 2.5% = $679,213 total payments
$540,000 loan at 4.5% = $984,996 total payments
Difference = $305,783

So the interest rate change alone should mean that house should sell for $680,000, which is basically the asking price today.

But that ignores any price appreciation (most price appreciation in housing is merely inflation / a reduction of the purchasing power of the dollar)!

Even assuming the dollar lost only 2% of its value each year (the absurd CPI rate), the same $375,000 house should cost $480,000, or roughly $105,000 more.

So this $675,000 house is probably $100,000 UNDERpriced and should be selling for $775,000.
That explains why houses are selling in 3 days, and there is huge demand outpacing supply.

The only explanation for that is that prices are too low. The above proves that prices are indeed too low.
One huge problem with runaway inflation is that people are unable to mentally react to rapidly changing prices. A $375,000 house is something I could dream of one day. A $675,000 seems absolutely absurd. People cannot mentally recognize that the former has become the latter in just 12 years. And so you get these pricing problems which causes the mismatches we are now seeing.

This will be disasterous for our future, but it is helpful to rationalize the prices today, and I am strongly considering taking a mortgage, after swearing them off, to take advantage of this huge house subsidy the government is offering.
 

Koolking

Sparrow
I also see prices going up. BlackRock and others are likely buying up properties instead of bonds to make money, pension funds need 8% gains to stay viable. I imagine, but I don't know, that most of these properties are in Texas and Florida. I suspect there will be more lock downs this coming Fall and they will be the "last straw" for those that the last lock down wasn't the "last straw". Florida usually has a jobs problem but doesn't have one at all now. Wages are rising quickly and there just aren't enough workers to fill the job openings. Would you rather live in a lock down state or in a state that has no mask requirements (think of your kids in school - who'd want them to suffer needlessly), or laws that prohibit private enterprise demanding to know your vaccine status?
 
I am going to make a statement which seems absurd. I don't like it, but I do believe it is true.
Housing prices today are TOO LOW.

I have been trying to understand this weird phenomenon of houses selling in a matter of days or hours, not weeks or months as they should. Along with the phenomenon of people cold calling homeowners to see if they want to sell. And houses selling at above asking prices. None of this makes any sense, and when you see inefficient and illogical market activity like that, only explanation, according to economic theory is that prices are too low. That seems absurd, but I did test the theory and find it true.

I am happily debt free, and don't really follow things like credit scores and interest rates that closely. I knew interest rates were low. I didn't realize they were at ALL TIME lows (really, I just thought they have been abnormally low for a decade and didn't realize they were dropped significantly in 2020).

View attachment 32382

I calculated the effect of this interest rate drop and was astounded.

I was looking at a house that just sold for $375,000 in 2009, and now the sellers are wanting $675,000 for it.
The difference in price was $300,000. This seems like a huge increase, but as you can see below, the cost is essentially unchanged if you are financing the purchase with a mortgage.

The "subsidy" the government is providing you via below market interest rates is $305,000.
100% of the price increase can be explained by the interest rate cuts.

Mathematically, this is proven by comparing a conventional 80% mortgage loan at 2.5% versus a more typical 4.5% (which is still below market but was more typical in this century):

$540,000 loan at 2.5% = $679,213 total payments
$540,000 loan at 4.5% = $984,996 total payments
Difference = $305,783

So the interest rate change alone should mean that house should sell for $680,000, which is basically the asking price today.

But that ignores any price appreciation (most price appreciation in housing is merely inflation / a reduction of the purchasing power of the dollar)!

Even assuming the dollar lost only 2% of its value each year (the absurd CPI rate), the same $375,000 house should cost $480,000, or roughly $105,000 more.

So this $675,000 house is probably $100,000 UNDERpriced and should be selling for $775,000.
That explains why houses are selling in 3 days, and there is huge demand outpacing supply.

The only explanation for that is that prices are too low. The above proves that prices are indeed too low.
One huge problem with runaway inflation is that people are unable to mentally react to rapidly changing prices. A $375,000 house is something I could dream of one day. A $675,000 seems absolutely absurd. People cannot mentally recognize that the former has become the latter in just 12 years. And so you get these pricing problems which causes the mismatches we are now seeing.

This will be disasterous for our future, but it is helpful to rationalize the prices today, and I am strongly considering taking a mortgage, after swearing them off, to take advantage of this huge house subsidy the government is offering.

In essence, this is simply a continuation of a long term trend that started in the 1980s.

While a family home in 1985 could be purchased for $40,000, if the inflation for that year was 10%, and interest rates at 10% as well, the nominal price increase for the year would need to be 20% to break even in real terms.

At 20% y.o.y. growth, the sticker price of that home would have doubled in a little over three years.

Using the long-term trend for the period 2000-2007, with inflation at 3% and mortgage rates at 7%, there would have been a doubling of the sticker price during that period. In spite of that, there would be no real growth realised unless the rate of nominal (sticker price) growth was in excess of 10% each and every year during that period.
 

Max Roscoe

Pelican
Orthodox Inquirer
Of course, at some point the math stops working. You can't have 10% increases in housing prices for long until suddenly no one except the capital elite class can afford to buy a house. This will happen faster than anyone realizes.

The rule of 72 states that at a 10% compound rate, the price of housing will double in 7.2 years. In a decade or so most people will never be able to afford a house. And the government will not be able to reverse the trend without destroying billions of fake dollars that they already created and crashing their system. It's a disaster just waiting to happen. Honestly the only thing that could stop it at this point would be a recession or war. Our satanic rulers would love that, so there's a good chance of really dark days ahead I'd say.

median-home-price-us-nominal-real-1951-mar-2021-2.png
 

Cortés

Woodpecker
Gold Member
The market is pretty bad in LatAm too.

Was shopping this year and surprised at the prices.
What countries are you referring to? I've been watching prices in Brazil and you can still find nice single family houses or small farms for less than 60k USD. Occasionally I check Colombia and Argentina as well and seem very reasonable as usual
 

aeroektar

Pelican
I'm at a crossroads and not sure what to do. Housing in the US is insane but looking at sites like Zillow and landwatch you can still find 2-10 acre plots of land for anywhere from like $6-12k an acre. I'm not going to let perfect be the enemy of good enough, everyone would love 50 acres of beautiful land, but a couple acres of "good enough" seems like the best investment to make right now for those of us middle class folk without property but with modest savings lying around. I'd worry about building a house later and park a camper on the land for the time being. I'm looking in the southeast, in the Appalachia region of NC, SC, TN, WV, KY, AL. Anyone else considering or took a similar path?
 

username

Ostrich
Gold Member
I'm at a crossroads and not sure what to do. Housing in the US is insane but looking at sites like Zillow and landwatch you can still find 2-10 acre plots of land for anywhere from like $6-12k an acre. I'm not going to let perfect be the enemy of good enough, everyone would love 50 acres of beautiful land, but a couple acres of "good enough" seems like the best investment to make right now for those of us middle class folk without property but with modest savings lying around. I'd worry about building a house later and park a camper on the land for the time being. I'm looking in the southeast, in the Appalachia region of NC, SC, TN, WV, KY, AL. Anyone else considering or took a similar path?

A few things to research...

Is there water available?
Is there utilities to the property line?
If there is water from a municipal water source how much is the tap fee? I know one where the fee is $25,000+ to connect. Etc..
Same thoughts for sewer and electrical.
Do you need a well? Can you get a permit/permission for a well? How much does the well cost? How long will it take to get the well approved, dug, and producing water?
If you need a septic tank how much will that cost and how hard is it for approval?

Buildability...

Can you build anything on it?
Can you bring in a manufactured house or does it require stick built?
How hard is it to get the permits?
How much does the permits cost? I know one county in California that charges $40,000 for a 1,800 sqft house.
Is the lot in a flood zone? In my county, building in a flood zone requires additional permits, fees, and headaches.
Can you owner builder or do you need a contractor?
Do you have legal access to the lot? Pretty common problem in rural Nevada with lots surrounded by BLM land.

Find out your lot setback requirements and see if you can still build. For my lot, my setback is 20ft on the sides and 40ft on the front and back. In my case, this reduces some of the desirable area to build.

How much is property taxes as a blank lot? What about with a house on it?

You can ask the agent and they might be able to provide you a little information. Never trust them though. You need to contact the city/town (if it's in one), the county, and any other local government agencies that regulate land, house, or things related to that yourself and get direct answers. You can do this either before making an offer or during escrow but never wait until you already closed.
 
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