Real estate thread

[Australia Sucks]

Max Roscoe what you saying about interest rates and house prices is mathematically true if interest rates remain low forever. If at some point interest rates rise substantially, then it will be a very different story. The math you articulated obviously works both ways.

 

[Arado]

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.

Aeroektar - curious how your thinking has evolved on this. If you just have a few acres but aren't able to build anything on it in the near future, what is the rush to buy? While there may be a boom in suburban housing (and I'm not sure if that's even going to last much longer) America isn't going to run out of land in the next few years. Also, as username mentions above there are often various restrictions on the land and for many you can't have a trailer on it indefinitely and the water use question can get complicated. Have you considered other investments like precious metals, crypto, commodity stocks? I suppose empty land will keep up with inflation but until you are able to put it to use it will have a negative carry until then.

 

[aeroektar]

Aeroektar - curious how your thinking has evolved on this. If you just have a few acres but aren't able to build anything on it in the near future, what is the rush to buy? While there may be a boom in suburban housing (and I'm not sure if that's even going to last much longer) America isn't going to run out of land in the next few years. Also, as username mentions above there are often various restrictions on the land and for many you can't have a trailer on it indefinitely and the water use question can get complicated. Have you considered other investments like precious metals, crypto, commodity stocks? I suppose empty land will keep up with inflation but until you are able to put it to use it will have a negative carry until then.

I'm not worried about the US running out of land, but I don't see it getting cheaper, or easier to purchase in the coming years. I know that most land comes with restrictions, I'd be looking at land with few restrictions. I'm aware of the investments you mentioned, I'm pretty comfortable with my investments at this point.

I guess it's just a personal decision to move towards building something tangible. I wasn't so much talking about it as a financial investment, more so an investment for personal security and the future.

 

[wiseape]

Land is an excellent hedge against inflation. I just put down earnest money on an acre in Oklahoma and will fulfill a major dream of building a house in it. The damage that has been done to blue-run cities will not heal anytime soon. Getting out is no small feat but I can say I’m half way there, and I am highly motivated to live in a sane place place where a man and his wife can live in peace. Plus I’d only be one hour away from a lovely small Orthodox parish.

 

[cosine]

Land is an excellent hedge against inflation. I just put down earnest money on an acre in Oklahoma and will fulfill a major dream of building a house in it. The damage that has been done to blue-run cities will not heal anytime soon. Getting out is no small feat but I can say I’m half way there, and I am highly motivated to live in a sane place place where a man and his wife can live in peace. Plus I’d only be one hour away from a lovely small Orthodox parish.

That's awesome. What size of house would you build, do you have a stack of cash set away?

Developing can be mighty expensive, though I'm sure OK is much less restrictive than my "purple" state.

 

[wiseape]

Nothing too big. You don’t need a lot to get something up. Haven’t decided the exact course but there’s plenty of prefab house manufacturers that can make the process easier. I will need an anaerobic septic system due to the rocky terrain and proximity to a creek. Not a biggie.

 

[Roosh]

I'm starting to see quite a few price drops in the real estate listings. I didn't see them a month ago.

 

[Papaya]

I'm starting to see quite a few price drops in the real estate listings. I didn't see them a month ago.

Theres definitely a cooling trend at the entry level. I think that market has peaked in terms of relative valuations. Ithink we’re likely still a good 18 -24 mos away from the real down cycle turn. As ever...interest rates are the canary

 

[Sword]

I used to love idaho/montana, but people from california/texas have driven up prices a legit 3x in 1-2 years over there. Are there any wet and mountainous areas left? Arkansas seems good, but the heat would kill me. I look at Minnesota/Wisconsin area or north Maine. I havent given up on colorado,idaho,montana, but you need 500k+ to even play out there.

 

[Roosh]

In my area, it was common to see Contingent/Pending sales after being on the market for only a couple of days. But now many houses have been on the market for 1-2 weeks without any action. Price drops are becoming common. It's obvious that something is happening. Sellers are pricing their homes too high and buyers are not desperate (or don't have the money).

Barring any heavy lockdowns this winter, I suspect that next spring/summer will have much better deals. But if there is another strong lockdown that constricts inventory, the high prices will continue.

 

[Talus]

Noticing the same market characteristics here in my area of the Midwest. If there is another strong lockdown that limits inventory, I have a feeling that the Fomo factor we saw last fall, won't be as novel this time around. That may keep the prices from going as high.

 

[cosine]

In my area, it was common to see Contingent/Pending sales after being on the market for only a couple of days. But now many houses have been on the market for 1-2 weeks without any action. Price drops are becoming common. It's obvious that something is happening. Sellers are pricing their homes too high and buyers are not desperate (or don't have the money).

Barring any heavy lockdowns this winter, I suspect that next spring/summer will have much better deals. But if there is another strong lockdown that constricts inventory, the high prices will continue.

Today I put in an offer on a home at 85% of its original list price; the listing agent didn't take offense.

A lot of people attempted to sell their homes at high premiums; it appears a "crash" has just happened, albeit on top of massive appreciation.

 

[Sisyphus]

I used to love idaho/montana, but people from california/texas have driven up prices a legit 3x in 1-2 years over there. Are there any wet and mountainous areas left? Arkansas seems good, but the heat would kill me. I look at Minnesota/Wisconsin area or north Maine. I havent given up on colorado,idaho,montana, but you need 500k+ to even play out there.

West Virginia's state nickname is "The Mountain State" and almost all of it gets over 40" of annual precipitation. Beautiful scenery, real wilderness, real estate is cheap, and there's little to no blue urban culture to speak of. Possibly in Harper's Ferry area and Morgantown (home of the state university), but I doubt your interest would lie in those areas anyway. Technically "Appalachia" includes a bit of land over the Ohio River in Ohio but it's more hilly than truly mountainous.

https://www.politico.com/2020-election/results/west-virginia/
Trump carried all 55 counties. The only close one was 49.4-48.2 in Monongalia County (where Morgantown is).

 

[Dilated]

West Virginia's state nickname is "The Mountain State" and almost all of it gets over 40" of annual precipitation. Beautiful scenery, real wilderness, real estate is cheap, and there's little to no blue urban culture to speak of. Possibly in Harper's Ferry area and Morgantown (home of the state university), but I doubt your interest would lie in those areas anyway. Technically "Appalachia" includes a bit of land over the Ohio River in Ohio but it's more hilly than truly mountainous.

https://www.politico.com/2020-election/results/west-virginia/
Trump carried all 55 counties. The only close one was 49.4-48.2 in Monongalia County (where Morgantown is).

W. Virginia gets an undeserved bad rap. It’s beautiful. It should be on anyone’s list who’s looking for a conservative, non-cosmopolitan place to live.

 

[C-Note]

W. Virginia gets an undeserved bad rap. It’s beautiful. It should be on anyone’s list who’s looking for a conservative, non-cosmopolitan place to live.

Unfortunately, the state does have its own income tax.

West Virginia Income Tax Rate and WV Tax Brackets 2020 - 2021

West Virginia state income tax rate table for the 2020 - 2021 filing season has five income tax brackets with WV tax rates of 3%, 4%, 4.5%, 6% and 6.5%. 2020 West Virginia tax brackets and rates for all four WV filing statuses are shown in the table below.

www.incometaxpro.net

They make up for it somewhat by having very low property and vehicle taxes, among the lowest in the country.

 

[Nordwand]

I used to love idaho/montana, but people from california/texas have driven up prices a legit 3x in 1-2 years over there. Are there any wet and mountainous areas left? Arkansas seems good, but the heat would kill me. I look at Minnesota/Wisconsin area or north Maine. I havent given up on colorado,idaho,montana, but you need 500k+ to even play out there.

To think, I thought UK HPI was bad...........

 

[nordle]

To think, I thought UK HPI was bad...........

Colorado median household income: £72k/$99k
UK median household income: £29k/$40k
UK is a poor country now, yet an average house still costs $350k/£255.

A sharp person in Colorado will not be heavily taxed and has amazing job opportunities, a huge market, and chances of making it big. Lots of people are on $200k and don't pay a ton of tax. Meanwhile in the UK, tax is nearly 50% and jobs are mostly low-paying.
£100k($137) is a very rare income, with only 2% getting that. In Colorado 7% are on that or more.

Even in the poorest US state, Mississippi, people are richer than in the UK.

 

[Max Roscoe]

I saw the first "price reduced" sign here in a long time this weekend.
It indeed seems things are returning to normal.
What will happen to all the people who overpaid for housing?
The starter home neighborhood I paid $100k in a few years back had houses going for $270,000. That's just absurd.

The problem is, there are never any more consequences for actions anymore. Stock market got bailed out (government intervention is the only reason stock prices are rising--almost every company is earning less money this year (Toyota is only making about half the cars they usually do).)

So will there be some government push to maintain high housing prices? It can be catastrophic financially to be highly leveraged and sell real estate at a loss. It's a bad proposition either way, but I just don't think people today have discipline or can handle losses. Everyone is reliant on outside help because time and time again the government steps in and manipulates so people don't have to face consequences of bad decisionmaking.

My guess is the buyers of the overpriced houses will get to keep their 3% mortgages rates, which will soon return to more normal 5+% rates. This will turn out to be a huge benefit if you hold them for 10+ years. But most people won't see it that way and will just be foreclosed when housing prices fall and lending rates rise.

The best scenario is if housing prices drop soon. If not, the number of houses sold at an inflated price will reach a threshold which will require government intervention. So far, it's been a small enough number to ignore.

 

[cosine]

Today I put in an offer on a home at 85% of its original list price; the listing agent didn't take offense.

I'm now under contract, I am only putting 5% down with an owner-occupant loan, plus I get 3% commission because I have a real estate license. The commission feeds directly into the down payment, and I won't owe Uncle Sam a nickel in taxes until the day I sell. So, I'm only putting $11k down in order to acquire a $550k home. I'll have closing costs, have to pay the inspector, appraisal, prepay insurance, etc. But, that still seems like a steal to me.
I'm young enough that I don't mind renting out one side to someone in order to cover 50%+ of the mortgage.

My area is appreciating heavily because it's in a nice mountain town where remote workers are moving and there is no graffiti or homeless invasion. It has a cute little downtown area. In 1-2 years, I should be able to get rid of PMI, rent the whole thing out for ~$400/month more than my mortgage, and jump into the next property. I can't think of a better way to get established into such a place.

 

[Sisyphus]

W. Virginia gets an undeserved bad rap. It’s beautiful. It should be on anyone’s list who’s looking for a conservative, non-cosmopolitan place to live.

Outside of this forum, let's continue to promote that bad rap.

To your point, even the largest city in the state has a population below 50,000. The 4th largest is under 30,000 and the 6th largest is under 20,000. 8 of the top 10 cities lost population since 2010, including losses of over 10% for the top two. https://worldpopulationreview.com/states/cities/west-virginia

The only major concern I see is that it's very close to some deep blue strongholds: Maryland, Northern VA, and the belly of the beast itself (DC). That location could make it heavily contested as a border region if it ever comes to a secession or 2 Americas scenario.