Are we in a housing bubble?

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Auream
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Re: Are we in a housing bubble?

Post by Auream »

rascott wrote: Sat Mar 13, 2021 10:30 pm
haripatil wrote: Fri Mar 12, 2021 12:23 pm It feels like a buuble is forming or in initial stage in around Charlotte NC. Prices are appreciating at much faster pace. We were looking for house and gave up because, I was not feeling confirmable with the speed of whole process . Another factor I noticed here is, investors are jacking up the market. Looks at the below price history, I only got maybe 5-10 houses like this in the market but I think trend is setting up.
That seems pretty mild honestly. A $400k house here from 2018 would easily be $550k today. My guess is this was an investor/ flipper, but managed to grab it via a private sale. I'm bombarded with calls from house wholesalers.
442k to 475k is also about the margin you’d expect to see from an iBuyer like Zillow or Opendoor. They typically turn around homes quite quickly and do minimal repairs.
hoofaman
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Re: Are we in a housing bubble?

Post by hoofaman »

Depends on where you live.

In many suburbs in the South East near major metro areas, yeah, demand seems really high. I'm getting multiple weekly cold calls from both realtors and investors asking if I want to sell/buy, and similar houses in my neighborhood that sold this year have gapped up big time in price compared to just 1-2 years ago, about 20% vs comparable proprieties. (I'm not a RE investor, just a regular average joe homeowner)

However, the midwestern town I grew up in seems to be untouched by this as of right now. Prices look basically flat the past 8 years
LINY
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Re: Are we in a housing bubble?

Post by LINY »

If home prices keep climbing and mortgage rates also keep climbing won’t that price out many prospective buyers?
drk
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Re: Are we in a housing bubble?

Post by drk »

LINY wrote: Sat Mar 13, 2021 11:03 pm If home prices keep climbing and mortgage rates also keep climbing won’t that price out many prospective buyers?
Not if their incomes rise more.
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wootwoot
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Re: Are we in a housing bubble?

Post by wootwoot »

LINY wrote: Sat Mar 13, 2021 11:03 pm If home prices keep climbing and mortgage rates also keep climbing won’t that price out many prospective buyers?
That depends a lot on locality. Where I live many of the transplants come from states with more expensive housing markets. They are more than happy to pay top dollar for housing considering it's 1/2 the price of housing where they're from.
IMO
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Re: Are we in a housing bubble?

Post by IMO »

Paul78 wrote: Sat Mar 13, 2021 9:51 pm
IMO wrote: Sat Mar 13, 2021 8:33 pm
2008 was about FOMO (about the massive change in expectation of housing prices).
I am currently having FOMO also. I live in a HCOL area make decent but not amazing amount of money. The most I can afford (even with a decent down payment) in a nice area is a 1 bed 1 bath condo. Anything more than and I will be eating rice and beans every day and essentially living pay check to pay check for 10 years or so (which is crazy given my income) . If I would have went ALL in 5 years ago when I move here I maybe could have bought a 3 bed 2 bath old house in a nice area and for sure could have at least got a 2 bed 1 bath house in a nice area. Granted I would have missed out on the market increases but that would have been more than made up in my house going up in value.

So yeah part of me fears I won't even be able to afford that 1 bed 1 bath if this trend continues for a few more years but a larger part of me says "oh well guess I will just rent till I retire". So the current plan it to wait for a crash and if that never comes just keep renting.
I actually have the same fear that my kid or even grandkids will probably be forced into having to rent for life. I'm all for housing going up, just wish it would be in a more reasonable rate. Maybe renting for life isn't the worst thing, but it's nice to feel one works hard/saves and has the reasonable option to consider purchasing a home. Ultimately it seems for many that the only way to afford a home will be to move to some less expensive place when they retire, if they chose to buy a home at that time or not. I have a simple theory that many of the world's problems from natural resources, food production, traffic, air quality, climate change, HOUSING, etc are based simply on the fact that there are too many people. In the US, population will always be increasing so there's not much relief even with birthrates being down to help because other forces negate a lowered birthrate. The likely only answer will be having every city be the size of New York City in terms of density, problem is now the pandemic apparently took the romance out of living within the city perhaps forever. Or maybe humans can colonize Mars (LOL), but that would be more miserable than living in the worst place(s) one could think of in the US (heck, people complain that Phoenix/Vegas are unbearable in the summer). . . .

In one sense, maybe it doesn't matter for most people, if the stock market goes up the same amount (10-20%) annually, then one doesn't need to stress as much about tying up their money in a house.
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Noobvestor
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Re: Are we in a housing bubble?

Post by Noobvestor »

I rented for years, then bought when housing went on sale after the Great Recession. Now I'm renting again, and I'm of the same mind I was back then: I can do this long-term, or if deals come along, well, I'll take those too. It's hard for me to imagine that there isn't some de facto inventory due to the moratoriums in place, so yes, I think we're in a bubble ... but I'm not banking on it. Happy to rent until the bubble pops (or keep on if it doesn't).
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IMO
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Re: Are we in a housing bubble?

Post by IMO »

physixfan wrote: Sat Mar 13, 2021 9:24 pm It's quite funny that, in this forum, people always say SP500 is not in a bubble or you can't time the market or it is perfectly OK to buy at all time high or just stay the course; but when it comes to the real estate, people say it is clearly a bubble and you just need to wait for the price to go back to sanity...
I think it's because a single property is more akin to buying a single stock vs. buying "the market" because history has shown much of real estate is local when it comes to if/how much a home appreciates relative to inflation or vs. the stock market. It also seems most people are not willing to hold it long term if they are forced/desire to re-locate for whatever reason and it gets complicated with high transaction costs. But I'd agree, one keeps a property for 20 to 30 years, it is likely to appreciate enough to be a good investment (but still not guaranteed). But it's local, broadly speaking, I believe the overall housing market is said to just keep pace with inflation over the long haul and the same is not true for the stock market over the long haul.
IMO
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Re: Are we in a housing bubble?

Post by IMO »

rascott wrote: Sat Mar 13, 2021 10:21 pm We have a serious housing shortage in many/ most decent size housing markets in this country. This is all the outcome of 2007-2010 oversupply crash. Home building over-corrected as result of that crisis..... and never ramped up to account for population growth over the last decade. Many reasons for this..... but we are where we are, where well qualified people can't find homes in their desired areas.

A normal absorption rate in an equally balanced market is 5-7. In that it would take 5-7 months to sell every home currently for sale, at current volume rates. In my market we're at 0.7.... that's a totally crazy, off the charts number indicating a massive shortage of homes available. Naturally prices rice like crazy in these scenarios
Did the US population suddenly change from 2019 to 2020? As of 2019, seemed many many places were at least doing reasonably ok with having enough housing supply for the demand. One could argue, the population in the US actually relatively declined 1/2 million people over the last year compared to normal. The way I see it, there is only 1 major factor that created more buyers than sellers in most areas.
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JoeRetire
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Re: Are we in a housing bubble?

Post by JoeRetire »

Wanderingwheelz wrote: Fri Mar 12, 2021 7:57 amEven our bubble dog is the best.
Bubble dogs are the best!
We’ve learned to make the best of the everything bubble.
As the wise man once said: When the only tool you have is a bubble maker, everything begins to look like a bubble! (or something like that...)
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LINY
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Re: Are we in a housing bubble?

Post by LINY »

wootwoot wrote: Sat Mar 13, 2021 11:39 pm
LINY wrote: Sat Mar 13, 2021 11:03 pm If home prices keep climbing and mortgage rates also keep climbing won’t that price out many prospective buyers?
That depends a lot on locality. Where I live many of the transplants come from states with more expensive housing markets. They are more than happy to pay top dollar for housing considering it's 1/2 the price of housing where they're from.
I can 100% see this. I agree it works best for retirees who relocate and save a ton on housing. However, are these other buyers assuming work from home is permanent? Some people, I heard, are purchasing 2-3 hours away from their current employer. It just seems pretty bold to me to make that move unless I knew 100% I could WFH or didn’t mind a 2-3 days commute.
LINY
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Re: Are we in a housing bubble?

Post by LINY »

drk wrote: Sat Mar 13, 2021 11:05 pm
LINY wrote: Sat Mar 13, 2021 11:03 pm If home prices keep climbing and mortgage rates also keep climbing won’t that price out many prospective buyers?
Not if their incomes rise more.
Are income rising though? I know a lot of people have been able to reduce their spending by working from home not more lunches, gas savings, monthly train tickets, etc.

I know it’s anecdotal, but a I hear more and more people pushing the limit on debt to income. Home flippers using hard money loans. People pulling out HELOCs and buying investment properties/vacation homes.
Wanderingwheelz
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Re: Are we in a housing bubble?

Post by Wanderingwheelz »

JoeRetire wrote: Sun Mar 14, 2021 7:02 am
Wanderingwheelz wrote: Fri Mar 12, 2021 7:57 amEven our bubble dog is the best.
Bubble dogs are the best!
We’ve learned to make the best of the everything bubble.
As the wise man once said: When the only tool you have is a bubble maker, everything begins to look like a bubble! (or something like that...)
My attempt at humor may not have been the best, but in all seriousness when everything is a bubble, is anything?

Is anything a value? When you’re having to go seek investable forest land to debate if there’s any value to be found, where are we? I’m a simple man. I already have all the trees I want- in fact, I just paid $1,100 to have one removed.
Being wrong compounds forever.
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JoeRetire
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Re: Are we in a housing bubble?

Post by JoeRetire »

Wanderingwheelz wrote: Sun Mar 14, 2021 8:00 am My attempt at humor may not have been the best, but in all seriousness when everything is a bubble, is anything?
Sometimes, we only see what we are looking for.
This isn't just my wallet. It's an organizer, a memory and an old friend.
Wanderingwheelz
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Re: Are we in a housing bubble?

Post by Wanderingwheelz »

JoeRetire wrote: Sun Mar 14, 2021 8:09 am
Wanderingwheelz wrote: Sun Mar 14, 2021 8:00 am My attempt at humor may not have been the best, but in all seriousness when everything is a bubble, is anything?
Sometimes, we only see what we are looking for.
We miss the forest for the trees.
Being wrong compounds forever.
bovineplane
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Re: Are we in a housing bubble?

Post by bovineplane »

We have lived in the same SW city (El Paso) going back 9 years. Rented until 2017 when we bought a home. Home was bought new for $305k in 2013. Listed at $305k and sat on the market 9 months. We bought it for $265.

Watching our neighborhood which is mixed new construction and re-sales, values ranged from 200-300k. New homes sold quick. Re-sales sat sometimes a few months but generally sold a bit under asking. Zillow kept our value 275-295 until Covid.

In the last 12-18 months, new houses sell before completed construction and never get listed. Re-sales get offers immediately and signs are gone in a week or two. There isn't anything for sale in our neighborhood and only a few lots left to build currently under construction. The range has shot up from 250 to one weird house selling for 600k. This isn't a large subdivision. Couple hundred houses within city limits. Now Zillow lists our house for 325k and watching homes sell around here even that seems a smidge low. Just finished a refi with the appraisal coming in at 335k.

Neighbor passed due to COVID. His ex wife was packing up the house 2 weeks ago which was not yet for sale but had a uhaul out front. She got several drive by offers and went under contract without ever listing. Buyer is paying all closing costs and paying the realtor to complete the transaction. No contingencies.

Values in El Paso sort of lagged the rest of the nation and muddled along since we moved here. Maybe started before COVID, maybe not. Maybe people looked at Phoenix, then Tucson and thought it was crazy and kept driving along I10. Wife has even mentioned selling just in case it is a bubble but we have no reason or interest in moving for 3-4 more years. While prices haven't ballooned, if you want a house you have to see/bid early and full asking to go under contract or engage a builder early before they start construction.
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beyou
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Re: Are we in a housing bubble?

Post by beyou »

Here in NYC suburbs, county property taxes are adjusted annually via re-assessment of property values (as well as rates per $ prop value). The county just sent a note that they will skip annual assessment this year due to extraordinary market conditions. I know for sure houses are selling above my assessed value since the pandemic started.

I also have colleagues moving to a new city for work, and they said it’s a tough bidding war/sellers market there too.
drk
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Re: Are we in a housing bubble?

Post by drk »

LINY wrote: Sun Mar 14, 2021 7:49 am Are income rising though? I know a lot of people have been able to reduce their spending by working from home not more lunches, gas savings, monthly train tickets, etc.

I know it’s anecdotal, but a I hear more and more people pushing the limit on debt to income. Home flippers using hard money loans. People pulling out HELOCs and buying investment properties/vacation homes.
As with real estate, that question is mostly local/regional because some sectors have seen big increases in income over the last year. Incomes were broadly rising before the pandemic, so hopefully we get back to that trend this year.
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Isabelle77
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Re: Are we in a housing bubble?

Post by Isabelle77 »

IMO wrote: Sun Mar 14, 2021 3:30 am
rascott wrote: Sat Mar 13, 2021 10:21 pm We have a serious housing shortage in many/ most decent size housing markets in this country. This is all the outcome of 2007-2010 oversupply crash. Home building over-corrected as result of that crisis..... and never ramped up to account for population growth over the last decade. Many reasons for this..... but we are where we are, where well qualified people can't find homes in their desired areas.

A normal absorption rate in an equally balanced market is 5-7. In that it would take 5-7 months to sell every home currently for sale, at current volume rates. In my market we're at 0.7.... that's a totally crazy, off the charts number indicating a massive shortage of homes available. Naturally prices rice like crazy in these scenarios
Did the US population suddenly change from 2019 to 2020? As of 2019, seemed many many places were at least doing reasonably ok with having enough housing supply for the demand. One could argue, the population in the US actually relatively declined 1/2 million people over the last year compared to normal. The way I see it, there is only 1 major factor that created more buyers than sellers in most areas.
I think there are a couple of things at play here. 1) COVID has kept many people from listing their homes. 2) Many Millenials (the largest generation alive) are looking to escape their trendy city apartments and move to SFH in the burbs, now that they can work from home. 3) home building never really corrected from the recession in most places, the cost of raw materials has skyrocketed 4) really low-interest rates have increased the FOMO.

We bought a year ago for 745K. I had a flyer on my door last week "California couple (Pat and Linda last names included with bio!) seek home in your neighborhood, $1.1 mil budget." Not that they would have actually paid 1.1mil but still, it's nuts here. We're in Washington state across the river from Portland. We're also getting Portland people moving out of the city and a lot of Californians, more than normal :)
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SuperTrooper87
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Re: Are we in a housing bubble?

Post by SuperTrooper87 »

Isabelle77 wrote: Mon Mar 15, 2021 1:50 pm
IMO wrote: Sun Mar 14, 2021 3:30 am
rascott wrote: Sat Mar 13, 2021 10:21 pm We have a serious housing shortage in many/ most decent size housing markets in this country. This is all the outcome of 2007-2010 oversupply crash. Home building over-corrected as result of that crisis..... and never ramped up to account for population growth over the last decade. Many reasons for this..... but we are where we are, where well qualified people can't find homes in their desired areas.

A normal absorption rate in an equally balanced market is 5-7. In that it would take 5-7 months to sell every home currently for sale, at current volume rates. In my market we're at 0.7.... that's a totally crazy, off the charts number indicating a massive shortage of homes available. Naturally prices rice like crazy in these scenarios
Did the US population suddenly change from 2019 to 2020? As of 2019, seemed many many places were at least doing reasonably ok with having enough housing supply for the demand. One could argue, the population in the US actually relatively declined 1/2 million people over the last year compared to normal. The way I see it, there is only 1 major factor that created more buyers than sellers in most areas.
I think there are a couple of things at play here. 1) COVID has kept many people from listing their homes. 2) Many Millenials (the largest generation alive) are looking to escape their trendy city apartments and move to SFH in the burbs, now that they can work from home. 3) home building never really corrected from the recession in most places, the cost of raw materials has skyrocketed 4) really low-interest rates have increased the FOMO.

We bought a year ago for 745K. I had a flyer on my door last week "California couple (Pat and Linda last names included with bio!) seek home in your neighborhood, $1.1 mil budget." Not that they would have actually paid 1.1mil but still, it's nuts here. We're in Washington state across the river from Portland. We're also getting Portland people moving out of the city and a lot of Californians, more than normal :)
We have had realtors going door to door leaving cards to contact them about selling their home. Never had that in our rural area.
alfaspider
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Re: Are we in a housing bubble?

Post by alfaspider »

I think a big difference between now and 2006 is that subprime lending is still pretty much absent. WSJ posted an interesting chart about this
(available on the front page for those who don't subscribe). :

https://www.wsj.com/articles/the-pandem ... _lead_pos5

Almost all of the growth is coming from higher scoring borrowers. To me, that indicates a level of durability that wasn't present back in 2006. Fewer people over extending themselves.

To some extent, I think what we are seeing is sector-limited inflation caused by the "k" shaped recovery. Single family homes are shooting up in value, while apartment rents are flat to declining. Similar for late model used cars. The white collar workforce hasn't lost income and has actually saved money from reducing restaraunt/vacation spending. Meanwhile, many lower tier workers (especially those working in hospitality) are still struggling. Official inflation numbers may be modest, but items typically bought by more affluent consumers are all going up.
snowman
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Re: Are we in a housing bubble?

Post by snowman »

Isabelle77 wrote: Mon Mar 15, 2021 1:50 pm
IMO wrote: Sun Mar 14, 2021 3:30 am
rascott wrote: Sat Mar 13, 2021 10:21 pm We have a serious housing shortage in many/ most decent size housing markets in this country. This is all the outcome of 2007-2010 oversupply crash. Home building over-corrected as result of that crisis..... and never ramped up to account for population growth over the last decade. Many reasons for this..... but we are where we are, where well qualified people can't find homes in their desired areas.

A normal absorption rate in an equally balanced market is 5-7. In that it would take 5-7 months to sell every home currently for sale, at current volume rates. In my market we're at 0.7.... that's a totally crazy, off the charts number indicating a massive shortage of homes available. Naturally prices rice like crazy in these scenarios
Did the US population suddenly change from 2019 to 2020? As of 2019, seemed many many places were at least doing reasonably ok with having enough housing supply for the demand. One could argue, the population in the US actually relatively declined 1/2 million people over the last year compared to normal. The way I see it, there is only 1 major factor that created more buyers than sellers in most areas.
I think there are a couple of things at play here. 1) COVID has kept many people from listing their homes. 2) Many Millenials (the largest generation alive) are looking to escape their trendy city apartments and move to SFH in the burbs, now that they can work from home. 3) home building never really corrected from the recession in most places, the cost of raw materials has skyrocketed 4) really low-interest rates have increased the FOMO.

We bought a year ago for 745K. I had a flyer on my door last week "California couple (Pat and Linda last names included with bio!) seek home in your neighborhood, $1.1 mil budget." Not that they would have actually paid 1.1mil but still, it's nuts here. We're in Washington state across the river from Portland. We're also getting Portland people moving out of the city and a lot of Californians, more than normal :)
We are going to be sellers this spring. Couple weeks ago, we stopped at a giant new development to see what the model homes look like on the inside. We walk in, there are 2 couples inside, lady realtor asks how can I help you, wife says we are going to be selling our house and just want to see what the competition looks like. Lady says sure np but please sign in, COVID requirement. Wife signs and off we go to look.

10-15 minutes later, we are leaving through the same model home, and both couples want to talk to us about our house - when are we selling, how much, etc. One couple from California, one from Texas (we are in Denver outer burbs). We talked for maybe 5 minutes, they took our info, wife had calls from both of their realtors later that day!

That visit was really educational. Mostly we wanted to find out what's in style as far as light fixtures, paint etc. What we learned, besides that, is that new homes are in very short supply, are insanely expensive, and there are 2 levels of waiting lists - regular and priority. Compared to that, our neighborhood prices now make sense to me, and no longer seem insane. I definitely would not want to be a buyer in this environment.
rage_phish
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Re: Are we in a housing bubble?

Post by rage_phish »

We are listing our house in the SF East bay at the end of this month. We had planned on doing. It last March but decided not to due to covid. We’re are listing our modest 3/2 house for $100k more than we planned on last year

Problem is houses where we want to buy are way up and or so far and few between. There is just nothing to buy. But we’re afraid if we don’t make to move now we may be forever priced out of our desired market
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InvestorHowie
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Re: Are we in a housing bubble?

Post by InvestorHowie »

DW is always looking at listings in the area of Northern New England where we hope to retire and has become a HOT market like so many during COVID. Today she remarked on seeing her first real estate listing stating 'Owners are sad to have to sell after 6 months as they are being called back by their employers.' Back to Manhattan or Boston, I presume. And they'll probably still make money on the purchase turned sale.

First sign for me that things might settle down a bit soon.
Time is your friend; impulse is your enemy. --John C. Bogle
toomuchRE
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Re: Are we in a housing bubble?

Post by toomuchRE »

InvestorHowie wrote: Mon Mar 15, 2021 6:00 pm DW is always looking at listings in the area of Northern New England where we hope to retire and has become a HOT market like so many during COVID. Today she remarked on seeing her first real estate listing stating 'Owners are sad to have to sell after 6 months as they are being called back by their employers.' Back to Manhattan or Boston, I presume. And they'll probably still make money on the purchase turned sale.

First sign for me that things might settle down a bit soon.
This is what I suspect will happen. A lot of people buying in far away land will repent. Buy in a commutable town even if you over pay.
The commutable suburb prices will spike even more..
katnok
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Re: Are we in a housing bubble?

Post by katnok »

We moved to Phoenix area (East Valley) from a LCOL area in PA last year. House prices were/are a sticker shock for us, but met several people who moved here from CA, and they couldn't be happier to be able to afford a 3000 sqft house for under 1 mil.

My wife and I are in our early to mid 40s with 250k+ HHI and 1.8mil net worth, but are scared to pull the trigger on a 750K house because this would be nearly twice as much as our previous house in PA. Today, we were about to make an offer on a 750k house, but got cold feet and backed out when our realtor mentioned that the house already had 7 offers - all above the list price and without any contingencies.

My observation has been that bidding wars are mostly on "moderately expensive" homes (in the range of ~ 600-800k) in our area. This seems to imply that these people have money/means to afford these homes, so less likely to be affected by rising interest rates or increasing prices.
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JAZZISCOOL
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Re: Are we in a housing bubble?

Post by JAZZISCOOL »

I just read an interesting Bloomberg story about Canada's white-hot housing market. I know little about Canada's RE market but it seems like things are more challenging up there vs. the US. Rates have been lower than the US. 1.97% at the end of 2020 for a common fixed-rate mortgage. Different dynamics and regulations were discussed.

https://www.bloomberg.com/news/articles ... nd=premium
toomuchRE
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Re: Are we in a housing bubble?

Post by toomuchRE »

250K HHI and 1.8M networth. Go for it..You feel that way because you came from PA but you can afford it
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Nate79
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Re: Are we in a housing bubble?

Post by Nate79 »

I like the calculated risk site for housing news and data and they recently posted this article showing how crazy low the housing inventory currently is:
https://www.calculatedriskblog.com/2021 ... t.html?m=1
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beyou
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Re: Are we in a housing bubble?

Post by beyou »

toomuchRE wrote: Mon Mar 15, 2021 7:18 pm
InvestorHowie wrote: Mon Mar 15, 2021 6:00 pm DW is always looking at listings in the area of Northern New England where we hope to retire and has become a HOT market like so many during COVID. Today she remarked on seeing her first real estate listing stating 'Owners are sad to have to sell after 6 months as they are being called back by their employers.' Back to Manhattan or Boston, I presume. And they'll probably still make money on the purchase turned sale.

First sign for me that things might settle down a bit soon.
This is what I suspect will happen. A lot of people buying in far away land will repent. Buy in a commutable town even if you over pay.
The commutable suburb prices will spike even more..
This is what I am hoping ! I am still in commute range of NYC, hoping people have rural fire sales where I want to retire and bid up near the city where I will soon stop working.
d18lover
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Re: Are we in a housing bubble?

Post by d18lover »

We gave up and have crammed a family of 5 with 2, 4, and 6 year old into a 2 bedroom apartment. No yard. House rents are too high.

Wish it was a bubble, fear it's not.
Last edited by d18lover on Mon Mar 15, 2021 10:41 pm, edited 1 time in total.
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physixfan
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Re: Are we in a housing bubble?

Post by physixfan »

For those who feel frustrated, let me tell you the situation in China, perhaps this will make you feel better...

When we talk about housing price is high, we are talking about combining all the savings from a young couple and both their parents (i.e. 6 wallets) to make the downpayment to buy a condo in the outside area of a city...

When we talk about price rising, we are talking about a new price jump every week, and the housing price almost doubled during the period of 2015-2016. BTW, the housing price is even higher today compared to 2016 in the first tier cities.

So the situation in the US is far far better. In fact, the housing price in the US is still lower than most major cities in the world...
Caduceus
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Re: Are we in a housing bubble?

Post by Caduceus »

physixfan wrote: Mon Mar 15, 2021 10:34 pm For those who feel frustrated, let me tell you the situation in China, perhaps this will make you feel better...

When we talk about housing price is high, we are talking about combining all the savings from a young couple and both their parents (i.e. 6 wallets) to make the downpayment to buy a condo in the outside area of a city...

When we talk about price rising, we are talking about a new price jump every week, and the housing price almost doubled during the period of 2015-2016. BTW, the housing price is even higher today compared to 2016 in the first tier cities.

So the situation in the US is far far better. In fact, the housing price in the US is still lower than most major cities in the world...
China is such an interesting situation. I do not know how it will all turn out but I visited some close friends once a few years back and found the whole thing very weird. The whole family - and when I say family, I mean like the couple and their parents and the extended coterie of uncles and aunts - would buy a condo in a city that no one would live in because they believed living in it would cause the resale value to fall. And also because it was bought with communal funds, there would be some family grumbling if only one or a few people got to live in it.

So there are these new gleaming condos in second and third-tier cities that are half empty. Like, at night, there are no lights coming from the windows. My friend's family lived in a home where there was no actual toilet (I had to use a bucket to flush water down a hole .... !) but they collectively owned a million-dollar condo which they saw as an investment.

And the whole thing is strange because if everyone already has a place they live in and are owning houses for "investment" that they won't rent out, and probably couldn't find renters for even if they did, then .... what are these houses for? There aren't sufficient renters because everyone owns their own home before buying an investment property, and even if Chinese people were to rent, they are not likely in the aggregate to rent expensive condos to live in. They would live somewhere more economical, share with roommates, and so on.
Valuethinker
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Re: Are we in a housing bubble?

Post by Valuethinker »

JAZZISCOOL wrote: Mon Mar 15, 2021 9:43 pm I just read an interesting Bloomberg story about Canada's white-hot housing market. I know little about Canada's RE market but it seems like things are more challenging up there vs. the US. Rates have been lower than the US. 1.97% at the end of 2020 for a common fixed-rate mortgage. Different dynamics and regulations were discussed.

https://www.bloomberg.com/news/articles ... nd=premium
Canada has gone insane.

For over 10 years, Greater Toronto Area and Greater Vancouver area have been in the top 10 most expensive cities in the world against rents or incomes-- The Economist housing price index. GVA is as expensive as London-- but which city is the #2 capital of the world's financial services industry (at least pre Brexit)? There are jobs in London that can pay £1m-2m for a family home, there are not anything like as many jobs in Vancouver that can do that. Except perhaps in Real Estate - Vancouver has become Miami North (downtown Toronto also).

Toronto spiked in 2017 and then had been gradually falling. Now that has been completely reversed by the latest boom. The condo explosion continues unabated.

4 bedroom house, 1920s built - so c 2000 square feet incl finished basement. Went on the market for $1.5m, sold for 2.25m.

The price effect has spread out across southern Ontario. Houses in Barrie (60m north, and that's a long 60 miles when the snow is blowing) for 3/4 million. Hamilton, which was an ex steel town further west along the lake, now booming. Retirement communities like Collingwood ONT just exploding -- $1m condos.

Part of it was money flowing in from offshore. But people have jumped on the bandwagon, leveraged to the hilt.

At the peak of the US bubble in 2006 6-6.5% of GDP was accounted for by housing and housing related activities. This fell to about 2.5% at the bottom and then recovered towards its historic long run average c 4-4.5%.

Canada? Structurally Canada has higher immigration, so you would expect housing to be more important. But housing and housing related activities are now around 9.5% of GDP.

This will not end well.
brianH
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Re: Are we in a housing bubble?

Post by brianH »

This is one of my favorite charts to help explain why we're in such a mess:

Image

We're currently cresting the hill of the largest generation in history, now peaking at the prime age when one moves out of a small city apartment and into the picket-fence house in the suburbs (like their parents did, and they said they never would.) There just isn't enough SFHs to satisfy the demand, even if all those in the Boomer generation were moving out.
Isabelle77
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Re: Are we in a housing bubble?

Post by Isabelle77 »

Valuethinker wrote: Tue Mar 16, 2021 10:07 am
JAZZISCOOL wrote: Mon Mar 15, 2021 9:43 pm I just read an interesting Bloomberg story about Canada's white-hot housing market. I know little about Canada's RE market but it seems like things are more challenging up there vs. the US. Rates have been lower than the US. 1.97% at the end of 2020 for a common fixed-rate mortgage. Different dynamics and regulations were discussed.

https://www.bloomberg.com/news/articles ... nd=premium
Canada has gone insane.

For over 10 years, Greater Toronto Area and Greater Vancouver area have been in the top 10 most expensive cities in the world against rents or incomes-- The Economist housing price index. GVA is as expensive as London-- but which city is the #2 capital of the world's financial services industry (at least pre Brexit)? There are jobs in London that can pay £1m-2m for a family home, there are not anything like as many jobs in Vancouver that can do that. Except perhaps in Real Estate - Vancouver has become Miami North (downtown Toronto also).

Toronto spiked in 2017 and then had been gradually falling. Now that has been completely reversed by the latest boom. The condo explosion continues unabated.

4 bedroom house, 1920s built - so c 2000 square feet incl finished basement. Went on the market for $1.5m, sold for 2.25m.

The price effect has spread out across southern Ontario. Houses in Barrie (60m north, and that's a long 60 miles when the snow is blowing) for 3/4 million. Hamilton, which was an ex steel town further west along the lake, now booming. Retirement communities like Collingwood ONT just exploding -- $1m condos.

Part of it was money flowing in from offshore. But people have jumped on the bandwagon, leveraged to the hilt.

At the peak of the US bubble in 2006 6-6.5% of GDP was accounted for by housing and housing related activities. This fell to about 2.5% at the bottom and then recovered towards its historic long run average c 4-4.5%.

Canada? Structurally Canada has higher immigration, so you would expect housing to be more important. But housing and housing related activities are now around 9.5% of GDP.

This will not end well.
I grew up in Oakville, outside of Toronto. My parents sold their house in 2001 for something like 650K, the house next door (which frankly isn't as nice) is currently pending for 7.75 million. It's just ridiculous.
SmallSaver
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Re: Are we in a housing bubble?

Post by SmallSaver »

brianH wrote: Tue Mar 16, 2021 10:08 am This is one of my favorite charts to help explain why we're in such a mess:

Image

We're currently cresting the hill of the largest generation in history, now peaking at the prime age when one moves out of a small city apartment and into the picket-fence house in the suburbs (like their parents did, and they said they never would.) There just isn't enough SFHs to satisfy the demand, even if all those in the Boomer generation were moving out.
I don't have the data to back it up, but I have seen reporting that many millennials actually do have different preferences than earlier generations and are more likely to value the amenities that come with city living. What's driving them out is the cost of housing. If people are really fleeing the cities you'd think housing costs there would decline and I don't think that's the case.
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Re: Are we in a housing bubble?

Post by alfaspider »

physixfan wrote: Mon Mar 15, 2021 10:34 pm For those who feel frustrated, let me tell you the situation in China, perhaps this will make you feel better...

When we talk about housing price is high, we are talking about combining all the savings from a young couple and both their parents (i.e. 6 wallets) to make the downpayment to buy a condo in the outside area of a city...

When we talk about price rising, we are talking about a new price jump every week, and the housing price almost doubled during the period of 2015-2016. BTW, the housing price is even higher today compared to 2016 in the first tier cities.

So the situation in the US is far far better. In fact, the housing price in the US is still lower than most major cities in the world...
Inflation of property values has been a worldwide phenomenon for a while now, and it seems like it has hit China harder than many other place. But I think the extreme outlier valuations in places like China and Vancouver are destined to a return to earth eventually. I see a lot of echoes in the 1980s Japanese bubble there (rising power country, lots of money thrown around, lots of foreign investment, extreme property values driven by speculation).
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Re: Are we in a housing bubble?

Post by fsrph »

SmallSaver wrote: Tue Mar 16, 2021 11:49 am If people are really fleeing the cities you'd think housing costs there would decline and I don't think that's the case.
This is what is baffling me also. Hear much about people fleeing cities and VHCOL areas. Shouldn't there be substantial softness in real estate there?

Francis
"Success is getting what you want. Happiness is wanting what you get." | Dale Carnegie
brianH
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Re: Are we in a housing bubble?

Post by brianH »

SmallSaver wrote: Tue Mar 16, 2021 11:49 am I don't have the data to back it up, but I have seen reporting that many millennials actually do have different preferences than earlier generations and are more likely to value the amenities that come with city living. What's driving them out is the cost of housing. If people are really fleeing the cities you'd think housing costs there would decline and I don't think that's the case.
Well, the average age of someone in the Millennial generation is about 32, so you still have about half of that large generation not quite at the average age for having their first child (30 or so in the wealthier areas surrounding cities.) Not to mention that you have another large generation (Z) hot on their heels (oldest just turned 22) to live in downtown areas.

It's anecdotal, but I'm an older Millennial, and all but 2 of my friends that lived in the city in their 20s and early 30s, and now have children, have since moved to the 'burbs. The 2 that haven't have expressed interest in moving, they are just somewhat stuck.

I think the 'different preferences' argument was largely imagined by city-proponents who didn't factor in the delay in age of having children with the Millennial generation. COVID, of course, adds its own lifestyle motivational shifts for couples near/at that stage in life.
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Re: Are we in a housing bubble?

Post by Slacker »

Last year we were considering moving to Nashville because we could get a little more house for the same money we spend right now and for the income tax savings. We recently decided to "wait and see" because houses that were in the $350k to $400k range last year are now effectively $400k to $500k.

We also have a rental property in a nice upper middle class neighborhood in Denver. We had been estimating that it would be worth $575k or so if we sold it. A neighbor's nearly identical home just sold for more than $680k.

Our current area in Raleigh, every single home comparable to our current home, listed on Zillow says "under contract" within a couple days of listing. Our current area has been fast moving for the last 3-4 years, but it has turned absolutely ridiculous since January.

I realize that this is just a collection if anecdotes, but it seems that the markets I've been paying attention to had a sudden, very recent, and abnormal jump in pricing. If this isn't a temporary bubble, then we must have already pulled forward the next 3-4 years of ordinary appreciation.

How will this turnout when some employers decide that they don't want employees working from home full time anymore?
Isabelle77
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Re: Are we in a housing bubble?

Post by Isabelle77 »

fsrph wrote: Tue Mar 16, 2021 12:45 pm
SmallSaver wrote: Tue Mar 16, 2021 11:49 am If people are really fleeing the cities you'd think housing costs there would decline and I don't think that's the case.
This is what is baffling me also. Hear much about people fleeing cities and VHCOL areas. Shouldn't there be substantial softness in real estate there?

Francis
Rents are falling in a lot of VHCOL areas.
https://wolfstreet.com/2021/01/04/exodu ... 20-cities/

https://www.forbes.com/sites/palashghos ... 0424d0f539
alfaspider
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Re: Are we in a housing bubble?

Post by alfaspider »

brianH wrote: Tue Mar 16, 2021 12:53 pm
SmallSaver wrote: Tue Mar 16, 2021 11:49 am I don't have the data to back it up, but I have seen reporting that many millennials actually do have different preferences than earlier generations and are more likely to value the amenities that come with city living. What's driving them out is the cost of housing. If people are really fleeing the cities you'd think housing costs there would decline and I don't think that's the case.
Well, the average age of someone in the Millennial generation is about 32, so you still have about half of that large generation not quite at the average age for having their first child (30 or so in the wealthier areas surrounding cities.) Not to mention that you have another large generation (Z) hot on their heels (oldest just turned 22) to live in downtown areas.

It's anecdotal, but I'm an older Millennial, and all but 2 of my friends that lived in the city in their 20s and early 30s, and now have children, have since moved to the 'burbs. The 2 that haven't have expressed interest in moving, they are just somewhat stuck.

I think the 'different preferences' argument was largely imagined by city-proponents who didn't factor in the delay in age of having children with the Millennial generation. COVID, of course, adds its own lifestyle motivational shifts for couples near/at that stage in life.
My impression is that Millenials do want something slightly different than the Boomers did when they were in their 30s and buying family houses. In the 70s/80s people were actively wanting to be away from cities because cities were perceived as not nice places to be. The idea was to get as far away from the crime/grime while still maintaining a reasonable commute (the office was still assumed to be in the city).

Today, most Millenials (at least the ones I know) don't want to leave the city, but find it difficult to raise children in any sort of city dwelling they could afford. The city is still a more interesting and desirable place, but they have to leave if they want space for kids to play. And besides, they don't have time to go out to those cool bars anyways. There's also a bit less centralization of office locations, meaning the assumption is no longer that you must commute from the suburbs to the city center. COVID sort of accelerated those trends- all the fun city stuff was closed anyways, and work from home meant the commute wasn't relevant anymore.
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ray.james
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Re: Are we in a housing bubble?

Post by ray.james »

alfaspider wrote: Tue Mar 16, 2021 1:27 pm
brianH wrote: Tue Mar 16, 2021 12:53 pm
SmallSaver wrote: Tue Mar 16, 2021 11:49 am I don't have the data to back it up, but I have seen reporting that many millennials actually do have different preferences than earlier generations and are more likely to value the amenities that come with city living. What's driving them out is the cost of housing. If people are really fleeing the cities you'd think housing costs there would decline and I don't think that's the case.
Well, the average age of someone in the Millennial generation is about 32, so you still have about half of that large generation not quite at the average age for having their first child (30 or so in the wealthier areas surrounding cities.) Not to mention that you have another large generation (Z) hot on their heels (oldest just turned 22) to live in downtown areas.

It's anecdotal, but I'm an older Millennial, and all but 2 of my friends that lived in the city in their 20s and early 30s, and now have children, have since moved to the 'burbs. The 2 that haven't have expressed interest in moving, they are just somewhat stuck.

I think the 'different preferences' argument was largely imagined by city-proponents who didn't factor in the delay in age of having children with the Millennial generation. COVID, of course, adds its own lifestyle motivational shifts for couples near/at that stage in life.
My impression is that Millenials do want something slightly different than the Boomers did when they were in their 30s and buying family houses. In the 70s/80s people were actively wanting to be away from cities because cities were perceived as not nice places to be. The idea was to get as far away from the crime/grime while still maintaining a reasonable commute (the office was still assumed to be in the city).

Today, most Millenials (at least the ones I know) don't want to leave the city, but find it difficult to raise children in any sort of city dwelling they could afford. The city is still a more interesting and desirable place, but they have to leave if they want space for kids to play. And besides, they don't have time to go out to those cool bars anyways. There's also a bit less centralization of office locations, meaning the assumption is no longer that you must commute from the suburbs to the city center. COVID sort of accelerated those trends- all the fun city stuff was closed anyways, and work from home meant the commute wasn't relevant anymore.
I am at the tail-end of Gen X. In my workplace colleagues, most millennials want to live in the city until they are planning kids. Once kids get in picture there are no proper care facilities in the city. Daycares are expensive and harder to get. They fill up in few weeks after slots open up. In suburbs services are much cheaper and accessible. Plus a better home with yard, safe schools and roads where kids can bike. With WFH being more common now, the largest generation is finally moving to the suburbia. There is still a preference for cities and 'no commute' but kids are changing the priority.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939
alfaspider
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Re: Are we in a housing bubble?

Post by alfaspider »

ray.james wrote: Tue Mar 16, 2021 1:43 pm
alfaspider wrote: Tue Mar 16, 2021 1:27 pm
brianH wrote: Tue Mar 16, 2021 12:53 pm
SmallSaver wrote: Tue Mar 16, 2021 11:49 am I don't have the data to back it up, but I have seen reporting that many millennials actually do have different preferences than earlier generations and are more likely to value the amenities that come with city living. What's driving them out is the cost of housing. If people are really fleeing the cities you'd think housing costs there would decline and I don't think that's the case.
Well, the average age of someone in the Millennial generation is about 32, so you still have about half of that large generation not quite at the average age for having their first child (30 or so in the wealthier areas surrounding cities.) Not to mention that you have another large generation (Z) hot on their heels (oldest just turned 22) to live in downtown areas.

It's anecdotal, but I'm an older Millennial, and all but 2 of my friends that lived in the city in their 20s and early 30s, and now have children, have since moved to the 'burbs. The 2 that haven't have expressed interest in moving, they are just somewhat stuck.

I think the 'different preferences' argument was largely imagined by city-proponents who didn't factor in the delay in age of having children with the Millennial generation. COVID, of course, adds its own lifestyle motivational shifts for couples near/at that stage in life.
My impression is that Millenials do want something slightly different than the Boomers did when they were in their 30s and buying family houses. In the 70s/80s people were actively wanting to be away from cities because cities were perceived as not nice places to be. The idea was to get as far away from the crime/grime while still maintaining a reasonable commute (the office was still assumed to be in the city).

Today, most Millenials (at least the ones I know) don't want to leave the city, but find it difficult to raise children in any sort of city dwelling they could afford. The city is still a more interesting and desirable place, but they have to leave if they want space for kids to play. And besides, they don't have time to go out to those cool bars anyways. There's also a bit less centralization of office locations, meaning the assumption is no longer that you must commute from the suburbs to the city center. COVID sort of accelerated those trends- all the fun city stuff was closed anyways, and work from home meant the commute wasn't relevant anymore.
I am at the tail-end of Gen X. In my workplace colleagues, most millennials want to live in the city until they are planning kids. Once kids get in picture there are no proper care facilities in the city. Daycares are expensive and harder to get. They fill up in few weeks after slots open up. In suburbs services are much cheaper and accessible. Plus a better home with yard, safe schools and roads where kids can bike. With WFH being more common now, the largest generation is finally moving to the suburbia. There is still a preference for cities and 'no commute' but kids are changing the priority.
That's true even of many closer in suburbs. We got on daycare waiting lists as soon as we got a positive pregnancy test, and got off waitlists when our son was 8 months old. Childcare for infants is tough to come by in many places. Licensing requirements are strict for infants and we found only about half of childcare facilities took infants (many were 2yrs+ only).
miamivice
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Re: Are we in a housing bubble?

Post by miamivice »

SuperTrooper87 wrote: Fri Mar 12, 2021 4:21 am Currently, in rural New England, homes are and have been selling far above their appraised value. Homes that are “worth” 200k are getting same day as listing offers of 240-270k cash, no inspection, sight unseen.

I know other areas are seeing similar situations as there is a mass exodus out of the urban areas (NY, CA, etc).

In the midst of this influx of urban money to the rural area, locals are trying to compete with homeownership. I lately heard a story from a coworker who has been trying to desperately buy a home before their rental lease ends. (Not being renewed as they plan to sell). Several times they offered on homes, 15%+ over asking, just to lose. He mentioned just offering more next time and using his ability as a first time homebuyer to put 3% down. This is when alarms went off in my head.

This seems eerily reminiscent of 2008. People taking loans to the max, no equity in homes, no EF, etc. What’s this kids chance of refinancing in 5 years because he has to buy a new roof or furnace because he overpaid on the house and has no cash? Well now home prices potentially sunk and his 250k home is really only worth 160k. He and others are screwed.

Are we in another bubble? Is this a national trend due to covid or is this in isolated pockets?
I don't consider us to be in a housing bubble, but clearly we are in a bitcoin bubble.
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Re: Are we in a housing bubble?

Post by MoonGlow »

Long time lurker here and just created an account for this thread. I'm a Realtor in the greater Boston Area and the market is getting a little to hot. I just had a closing on a property I sold and got 76K over asking. In which we has 12 offers all over the asking price along with the waiving of inspection and appraisal. I am not in the crystal ball or prediction business but as a Realtor something seems way off.
ballons
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Re: Are we in a housing bubble?

Post by ballons »

rascott wrote: Sat Mar 13, 2021 10:21 pm We have a serious housing shortage in many/ most decent size housing markets in this country. This is all the outcome of 2007-2010 oversupply crash. Home building over-corrected as result of that crisis..... and never ramped up to account for population growth over the last decade. Many reasons for this..... but we are where we are, where well qualified people can't find homes in their desired areas.

A normal absorption rate in an equally balanced market is 5-7. In that it would take 5-7 months to sell every home currently for sale, at current volume rates. In my market we're at 0.7.... that's a totally crazy, off the charts number indicating a massive shortage of homes available. Naturally prices rice like crazy in these scenarios
They said the same thing in 2006. "They aren't making anymore land!" "It's different this time!" Turns out this was all a lie. That oversupply wasn't bulldozed. US population has been consistently below replacement rate since 2007.

I assure you when the bubble bursts property will magically become available at record numbers for you buy.
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JAZZISCOOL
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Re: Are we in a housing bubble?

Post by JAZZISCOOL »

MoonGlow wrote: Tue Mar 16, 2021 2:07 pm Long time lurker here and just created an account for this thread. I'm a Realtor in the greater Boston Area and the market is getting a little to hot. I just had a closing on a property I sold and got 76K over asking. In which we has 12 offers all over the asking price along with the waiving of inspection and appraisal. I am not in the crystal ball or prediction business but as a Realtor something seems way off.
Thanks for the post. That is just crazy. I would be curious if buyers are coming in with all cash offers as well. :shock:
ballons
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Re: Are we in a housing bubble?

Post by ballons »

brianH wrote: Tue Mar 16, 2021 10:08 am This is one of my favorite charts to help explain why we're in such a mess:

...

We're currently cresting the hill of the largest generation in history, now peaking at the prime age when one moves out of a small city apartment and into the picket-fence house in the suburbs (like their parents did, and they said they never would.) There just isn't enough SFHs to satisfy the demand, even if all those in the Boomer generation were moving out.
There is enough housing, the problem is it is in a bubble which they can't afford.


https://www.pewresearch.org/fact-tank/2 ... epression/
Image

Single Family Homes. A lot of these people aren't having kids.
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