Vacation home frenzy?

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Annabel Lee
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Vacation home frenzy?

Post by Annabel Lee »

We are in the market for a vacation home in the Midwest and can confirm that the same features of a bubble that are present across the standard housing market are showing up for second houses; even in out-of-the-way locations. Multiple offers, escalation clauses and waived appraisals/inspections are the norm at our price point ($300k-$400k).

And by the way, if you want to rent a place for a week in the summer, forget about it - prices are through the roof (75-100% more than pre-pandemic) if places are even available at this point.

While our experience is in the Midwest I know this is similar in places like Tahoe, Cape Cod, FL etc.

Pretty sure these things are related and the strong rental market is driving higher purchase prices. However given finite supply, increased WFH even after things are back from normal, and how COVID has driven Americans back to nature, is it possible that we’re still in the early innings of this price rise?

If not, what bursts this bubble?
Kiter
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Re: Vacation home frenzy?

Post by Kiter »

Home in my neck of the woods rented MD - LD for 2 million (CNBC)
LittleMaggieMae
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Re: Vacation home frenzy?

Post by LittleMaggieMae »

If not, what bursts this bubble?
When the money runs out the bubble will either pop or deflate.

I guess we'd need to figure out where the "money" is coming from (that's fueling all the housing spending) to guesstimate at when it might slow or end.

I get the whole "I sold my house - to buy an even bigger/nicer/better for me house" is perhaps fueling the purchase of high priced houses.
But who is buying the house they just sold? If renters are suddenly buying houses in droves - where did they get the downpayment? On a 300K house 20% would be 60K and probably would need another 10K for prepaids, fees, and moving and say another 5K for a cash EF for after move in. So 75K cash on hand?

Have renters been able to save up that kind of $$? I keep hearing about how Student loan debt is holding back many home buyers. Are incomes high enough to support this kind of saving/spending?

Is real estate out side of areas with high paying jobs "languishing"??
adamthesmythe
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Re: Vacation home frenzy?

Post by adamthesmythe »

Supply is low so it doesn't take many buyers to move the market.

There are always some people around with spare cash. Count me as one of them. I am living full-time in a small vacation house I bought before retirement. The market is up. I can easily afford to buy up.

I think Covid has made people willing to spend more. Partly because there are some things that it hasn't been possible to spend on- restaurant meals, iinternational vacations.

I don't think the housing shortage and crazy markets are the new normal. Nothing has been normal. As Gorko said, Things will change.
RadAudit
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Re: Vacation home frenzy?

Post by RadAudit »

Annabel Lee wrote: Sat May 15, 2021 4:31 pm is it possible that we’re still in the early innings of this price rise?

If not, what bursts this bubble?
We've been vacationing on one piece of sand for 35+ years. Don't know what'll burst this bubble; but, I've seen them burst before - gas crisis, inflation, interest rates, etc. Always different. What is interesting is once the bubble pops, I've seen vacation homes sit on the market for years (The key is the moss that grows on the for sale signs).

So, if you buy, hope you like it. It may be your other forever home.
FI is the best revenge. LBYM. Invest the rest. Stay the course. Die anyway. - PS: The cavalry isn't coming, kids. You are on your own.
MAandMEMom
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Re: Vacation home frenzy?

Post by MAandMEMom »

I have a second home in Vacationland (Maine) and typically during this time of year there are at least 50 lakefront homes for sale in our region and right now, five out of the 10 are pending. There are zero available on my lake when there might be at least a dozen in other years. People who have had lots for many, many years are placing them on the market seeing this as a once in a lifetime opportunity to make the most cash. And there are no rentals available this summer.
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JonnyDVM
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Re: Vacation home frenzy?

Post by JonnyDVM »

I suspect in a couple years the folks that purchased second homes due to Covid stir craziness will quickly tire of them and sell. Even we were seriously considering purchasing a mountain cabin last year until rational thought took over. With our lifestyle, that would have been a mistake. I’m expecting a glut of second homes on the market in 3-5 years and a significant price drop. Primary residences I have no idea.
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pizzy
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Re: Vacation home frenzy?

Post by pizzy »

LittleMaggieMae wrote: Sat May 15, 2021 4:58 pm
If not, what bursts this bubble?
If renters are suddenly buying houses in droves - where did they get the downpayment? On a 300K house 20% would be 60K and probably would need another 10K for prepaids, fees, and moving and say another 5K for a cash EF for after move in. So 75K cash on hand?
People are putting 5% or less down.
typical.investor
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Re: Vacation home frenzy?

Post by typical.investor »

LittleMaggieMae wrote: Sat May 15, 2021 4:58 pm
If not, what bursts this bubble?
When the money runs out the bubble will either pop or deflate.

I guess we'd need to figure out where the "money" is coming from (that's fueling all the housing spending) to guesstimate at when it might slow or end.
The money in many cases is coming from deep pockets...and increasing from overseas.
Big foreign investment firms that buy office buildings, hotels and shopping centers around the world have a new favorite real-estate play: single-family homes in American suburbs.

These institutions are partnering with U.S. housing companies to buy or build rental homes by the thousands. In suburban neighborhoods near cities such as Atlanta, Las Vegas and Phoenix, blocks of families are sending monthly rent checks to ventures backed by Canadian pension funds, European insurers, and Asian or Middle Eastern government-run funds.

The overseas investors are following in the footsteps of many big U.S. investment firms and pension funds, which started buying single-family homes on a large scale in the aftermath of the financial crisis.

Foreign investors barely registered in these markets a few years ago. Now, they account for nearly a third of institutional investment in single-family rental homes, said Alex Foshay, head of international capital markets at real-estate services firm Newmark.
https://www.wsj.com/articles/that-subur ... 1618306380
Jaymover
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Re: Vacation home frenzy?

Post by Jaymover »

The overseas investors are following in the footsteps of many big U.S. investment firms and pension funds, which started buying single-family homes on a large scale in the aftermath of the financial crisis.
I have read that this is happening globally. Depressing. The family home has become a special asset class. It means that fewer and fewer families will be living in homes that they own as the only reason that they are good investments are inelastic supply and that families bring in two incomes and are loathed to move too much
SwampDonkey
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Re: Vacation home frenzy?

Post by SwampDonkey »

Lots of very large corporations are now buying SFHs as well and converting them into rentals. They own hundreds of thousands of homes. As soon as a house hits the market, several realtors will try and pitch the home to the corporations. If they think they can make money on it (they often make tons on it), they offer all-cash and above asking price.
It's an easy commission for the realtors so it's a bit of a feeding frenzy between them as they all want to be the one who gives the first pitch to the corporation.
Olemiss540
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Re: Vacation home frenzy?

Post by Olemiss540 »

The housing market will cool when the money flow slows down.

The economy is red hot, the feds dumping money in to keep interest rates down, any speculative asset is bubbling and paper wealth is at levels never seen in the history of mankind.

The great "wealth tranfer" in crypto and meme stocks has a lot of normal everyday folks with some incredible amounts of paper wealth. FOMO is driving serious amounts of concentration and leverage risk in my opinion.

What will cause the next downturn in all of these assets is impossible to guess (war, inflation, population contraction, global warming, etc), but the fact is one will come. Best to just try and enjoy this while we can while also remaining prudent with our investment strategy so as to not be caught unprepared when the music stops.
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SQRT
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Re: Vacation home frenzy?

Post by SQRT »

Yes, I’ve certainly noticed the significant run up in prices in all 3 of our vacation type properties (Arizona, Ontario lake country, and Canmore Alberta). Over the past year I would say they are up about 25%, 40%, and 15% respectively. Doesn’t seem sustainable but who knows? Will eventually sell two of these places so price increases are welcome. Cant travel anywhere else, so it’s nice to be able to travel between these places.
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watchnerd
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Re: Vacation home frenzy?

Post by watchnerd »

Olemiss540 wrote: Sun May 16, 2021 6:57 am The housing market will cool when the money flow slows down.

The economy is red hot, the feds dumping money in to keep interest rates down, any speculative asset is bubbling and paper wealth is at levels never seen in the history of mankind.

The great "wealth tranfer" in crypto and meme stocks has a lot of normal everyday folks with some incredible amounts of paper wealth. FOMO is driving serious amounts of concentration and leverage risk in my opinion.

What will cause the next downturn in all of these assets is impossible to guess (war, inflation, population contraction, global warming, etc), but the fact is one will come. Best to just try and enjoy this while we can while also remaining prudent with our investment strategy so as to not be caught unprepared when the music stops.
Money is so available and cheap right now that if you're not putting it into play you're falling behind.

“As long as the music is playing, you've got to get up and dance"

"Make hay while the sun shines"

Just be ready to go 'risk off' when the money stops.
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peetsperk
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Re: Vacation home frenzy?

Post by peetsperk »

This too shall pass.
Xrayman69
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Re: Vacation home frenzy?

Post by Xrayman69 »

Second homes and vacation homes are probably considered a luxury asset and thus my presumption that those that have completed these transactions are better positioned to tolerate or navigate a downturn.

Interest rates for second homes or vacation homes are at higher rates (albeit historically low rates) but still require a substantive down payment or equity to qualify for a loan. I’m less inclined to “predict “ an eventual “crash” that would lead to great deals in the future. Those paying cash outright again are probably well positioned to navigate any future general economic reversal.

Just my 2 cents.

I’m no more confident that there are or will be deals to be had or if the martlet will remain in a “frenzy “ for the foreseeable future.
mkawasaki
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Re: Vacation home frenzy?

Post by mkawasaki »

Annabel Lee wrote: Sat May 15, 2021 4:31 pm Pretty sure these things are related and the strong rental market is driving higher purchase prices. However given finite supply, increased WFH even after things are back from normal, and how COVID has driven Americans back to nature, is it possible that we’re still in the early innings of this price rise?
I'm not sure what innings we're in ... as strongly believe any market is unpredictable.

However, we made a decision to sell our vacation home last week. It is in the California Wine Country next to the Russian River. 550 sq ft, 1B/1Ba, remodeled 6 years ago, 6000 sq ft lot, listing at $469K. Bought for $170K in 2012, and put about $55K for upgrades.

We'll see what happens!
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Squirrel208
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Re: Vacation home frenzy?

Post by Squirrel208 »

Annabel Lee wrote: Sat May 15, 2021 4:31 pm If not, what bursts this bubble?
Higher interest rates, tighter money supply, lower building materials commodity prices, home-building materials supply chain catching up post-covid, eventual increase in available new home inventory (which also eventually leads to increased used-home inventory), realignment of consumer expectations to living in realistically sized homes rather than the largest and fanciest that they can afford. Those are just some that come quickly to mind. I'm sure there's more.
goos_news
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Re: Vacation home frenzy?

Post by goos_news »

I've noticed the huge surge in vacation homes and remote properties here. A lot of them were all cash. The prices and lack of availability this summer are through the roof -- have been trying to book. Also heard from a realtor that they've seen deals fall as people get recalled back into the office.

There is a portion of the population that has seen their savings and worth accelerate the last few years. More than enough to saturate a relatively small rental market. The pandemic has made them crave a getaway to call their own, or plan a drivable getaway. My sense is that there will be a bubble. Our overseas property has not seen the same runup, but bookings have exploded the last two weeks.
New Providence
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Re: Vacation home frenzy?

Post by New Providence »

We operate based on financial conditions.

If the economic situation is great we rush to buy stuff, including houses and equities.

But if the economic situation isn't good, we dump stuff, including houses and equities.

It takes a while to realize that instead of buying high and selling low, one should sell high and buy low. :)
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eye.surgeon
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Re: Vacation home frenzy?

Post by eye.surgeon »

pizzy wrote: Sat May 15, 2021 9:23 pm
LittleMaggieMae wrote: Sat May 15, 2021 4:58 pm
If not, what bursts this bubble?
If renters are suddenly buying houses in droves - where did they get the downpayment? On a 300K house 20% would be 60K and probably would need another 10K for prepaids, fees, and moving and say another 5K for a cash EF for after move in. So 75K cash on hand?
People are putting 5% or less down.
The actual average down payment during this current housing boom is 16%. That's up 33% from 2019.
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stoptothink
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Re: Vacation home frenzy?

Post by stoptothink »

eye.surgeon wrote: Mon May 17, 2021 11:11 am
pizzy wrote: Sat May 15, 2021 9:23 pm
LittleMaggieMae wrote: Sat May 15, 2021 4:58 pm
If not, what bursts this bubble?
If renters are suddenly buying houses in droves - where did they get the downpayment? On a 300K house 20% would be 60K and probably would need another 10K for prepaids, fees, and moving and say another 5K for a cash EF for after move in. So 75K cash on hand?
People are putting 5% or less down.
The actual average down payment during this current housing boom is 16%. That's up 33% from 2019.
There's also a growing number of company's such as https://accept.inc/ which allow you to appear to be an all-cash offer, when you aren't. I know at least two homebuyers who have used such a service recently, that has got to be influencing that data.
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HomerJ
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Re: Vacation home frenzy?

Post by HomerJ »

watchnerd wrote: Sun May 16, 2021 11:36 am Just be ready to go 'risk off' when the money stops.
It's really not that easy, watch...

Unless, of course, you will tell us when the money stops?

And if you're wrong on the timing, make up any our losses? :sharebeer
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
hi_there
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Re: Vacation home frenzy?

Post by hi_there »

Annabel Lee wrote: Sat May 15, 2021 4:31 pm Is it possible that we’re still in the early innings of this price rise?
Of course it is possible. SF Bay Area had buying frenzy like this in 2010, and it is still going up 10 years later.
Annabel Lee wrote: Sat May 15, 2021 4:31 pm If not, what bursts this bubble?
In my view, it is a fundamental repricing that will not stop once offices reopen. Lots of people will have hybrid work, and knowing with high certainty that they will have 2 remote work weekdays + weekend might just solidify plans to buy vacation homes. So, it doesn't look that much like a bubble to me, as much as a fundamental repricing.

What makes the market crash? A recession, job losses, spiking interest rates, etc.
Jeepergeo
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Re: Vacation home frenzy?

Post by Jeepergeo »

hi_there wrote: Mon May 17, 2021 12:34 pm
Annabel Lee wrote: Sat May 15, 2021 4:31 pm Is it possible that we’re still in the early innings of this price rise?
Of course it is possible. SF Bay Area had buying frenzy like this in 2010, and it is still going up 10 years later.
Annabel Lee wrote: Sat May 15, 2021 4:31 pm If not, what bursts this bubble?
In my view, it is a fundamental repricing that will not stop once offices reopen. Lots of people will have hybrid work, and knowing with high certainty that they will have 2 remote work weekdays + weekend might just solidify plans to buy vacation homes. So, it doesn't look that much like a bubble to me, as much as a fundamental repricing.

What makes the market crash? A recession, job losses, spiking interest rates, etc.
IMHO, when the reset occurs and the bills come due, companies will start to layoff staff, and I suspect some of the first to go will those working remotely the most. It is much easier for managers responsible for making the layoff decisions to cut someone they rarely see (employee is telecommuting) compared to someone they see everyday (employee is working in the office). At that time, those that justified telecommuting home (vacation home) purchases to support telecommuting will start dumping those properties in mass at nice prices for buyers.
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Re: Vacation home frenzy?

Post by THY4373 »

Jeepergeo wrote: Mon May 17, 2021 3:02 pm IMHO, when the reset occurs and the bills come due, companies will start to layoff staff, and I suspect some of the first to go will those working remotely the most. It is much easier for managers responsible for making the layoff decisions to cut someone they rarely see (employee is telecommuting) compared to someone they see everyday (employee is working in the office). At that time, those that justified telecommuting home (vacation home) purchases to support telecommuting will start dumping those properties in mass at nice prices for buyers.
This really depends on the organization. I supervise seven employees. Only two are located in the same state with me the rest are spread around the country in different locations. The larger team I work for of approximately 100 people is the same way. If layoffs were to come location would play zero in my decision making. Not every organization or group with in it has a central location anymore. Of course we were already heavily telework long before COVID.
cbs2002
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Re: Vacation home frenzy?

Post by cbs2002 »

Very thankful for our long-term relationship with someone who rents to us every summer!

This doesn't seem that complicated. Low interest rates, massive runup in equities since March 2020, many many white collar workers not only held their jobs but saved more during Covid, people chomping at the bit to get out of town with the means and time to do so.

To me a rural second home has always been something to buy only if you don't notice the financial impact at all. I've watched many of them sit and sit for months or even years before selling and those days will be back. I hope, because maybe then we'll be ready to buy one.
mkawasaki
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Re: Vacation home frenzy?

Post by mkawasaki »

mkawasaki wrote: Sun May 16, 2021 12:46 pm
Annabel Lee wrote: Sat May 15, 2021 4:31 pm Pretty sure these things are related and the strong rental market is driving higher purchase prices. However given finite supply, increased WFH even after things are back from normal, and how COVID has driven Americans back to nature, is it possible that we’re still in the early innings of this price rise?
I'm not sure what innings we're in ... as strongly believe any market is unpredictable.

However, we made a decision to sell our vacation home last week. It is in the California Wine Country next to the Russian River. 550 sq ft, 1B/1Ba, remodeled 6 years ago, 6000 sq ft lot, listing at $469K. Bought for $170K in 2012, and put about $55K for upgrades.

We'll see what happens!
Quick update. Received offer for $476K within 12 hours of listing. $7K over asking and very high down payment. We signed the papers, but we'll see if the market keeps going up.
New Providence
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Re: Vacation home frenzy?

Post by New Providence »

mkawasaki wrote: Sun May 23, 2021 10:56 am
mkawasaki wrote: Sun May 16, 2021 12:46 pm
Annabel Lee wrote: Sat May 15, 2021 4:31 pm Pretty sure these things are related and the strong rental market is driving higher purchase prices. However given finite supply, increased WFH even after things are back from normal, and how COVID has driven Americans back to nature, is it possible that we’re still in the early innings of this price rise?
I'm not sure what innings we're in ... as strongly believe any market is unpredictable.

However, we made a decision to sell our vacation home last week. It is in the California Wine Country next to the Russian River. 550 sq ft, 1B/1Ba, remodeled 6 years ago, 6000 sq ft lot, listing at $469K. Bought for $170K in 2012, and put about $55K for upgrades.

We'll see what happens!
Quick update. Received offer for $476K within 12 hours of listing. $7K over asking and very high down payment. We signed the papers, but we'll see if the market keeps going up.
Sounds like you underpriced it.
mkawasaki
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Re: Vacation home frenzy?

Post by mkawasaki »

New Providence wrote: Sun May 23, 2021 10:58 am
mkawasaki wrote: Sun May 23, 2021 10:56 am
mkawasaki wrote: Sun May 16, 2021 12:46 pm
Annabel Lee wrote: Sat May 15, 2021 4:31 pm Pretty sure these things are related and the strong rental market is driving higher purchase prices. However given finite supply, increased WFH even after things are back from normal, and how COVID has driven Americans back to nature, is it possible that we’re still in the early innings of this price rise?
I'm not sure what innings we're in ... as strongly believe any market is unpredictable.

However, we made a decision to sell our vacation home last week. It is in the California Wine Country next to the Russian River. 550 sq ft, 1B/1Ba, remodeled 6 years ago, 6000 sq ft lot, listing at $469K. Bought for $170K in 2012, and put about $55K for upgrades.

We'll see what happens!
Quick update. Received offer for $476K within 12 hours of listing. $7K over asking and very high down payment. We signed the papers, but we'll see if the market keeps going up.
Sounds like you underpriced it.
Never know! I sold house in 2007 and had three over-asking offers; people said I "underpriced" it but one year later the house value was down 25%. Live my life based on current information and don't look back (otherwise I'll go crazy :D ).

We decided to price at reasonable value to get some "excitement" but were on the high-end of everyone's estimates. Even our next door neighbor stopped by a few days ago and said "Are you sure about this price? Can't believe someone would pay that much!" We are extremely happy with the offer. The buyer was aggressive as she's lost 6 or 7 bids already; so as usually happens in these markets, you get frustrated and "go big or get out". Learned some information about the buyer and seems like a great person and think she'll love her new home.
Shallowpockets
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Re: Vacation home frenzy?

Post by Shallowpockets »

Is this frenzy on homes the flip side of homeless encampments?
We have extremes here. Be glad you can be in the high side of the boat.
Miguelito
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Re: Vacation home frenzy?

Post by Miguelito »

People in America buy things on impulse. Can't travel? I have a great idea! let's buy a vacation home. Just a "few" more people than usual with that idea will move the market. Wait until those folks can fly again and they will realize they don't use the place as much and it costs more than they thought to upkeep, then they will sell. Vacation home markets are far more volatile for this reason.

I say 2022-2023 prices will go back to pre-COVID. Add the potential of rate increases and it could go down significantly more.
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Annabel Lee
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Re: Vacation home frenzy?

Post by Annabel Lee »

Shallowpockets wrote: Sun May 23, 2021 12:02 pm Is this frenzy on homes the flip side of homeless encampments?
We have extremes here. Be glad you can be in the high side of the boat.
Thanks, agree it’s a first world problem and I’m grateful/beyond fortunate to be in the position to do this. Actually... What’s the term for even better than a first world problem?
Miguelito wrote: Sun May 23, 2021 8:17 pm People in America buy things on impulse. Can't travel? I have a great idea! let's buy a vacation home. Just a "few" more people than usual with that idea will move the market. Wait until those folks can fly again and they will realize they don't use the place as much and it costs more than they thought to upkeep, then they will sell. Vacation home markets are far more volatile for this reason.

I say 2022-2023 prices will go back to pre-COVID. Add the potential of rate increases and it could go down significantly more.
I like this forecast a great deal. Planning to strike then. Our kids are young, I foresee future flexibility with work and we’d use it year round. No interest in buying into a bubble. The end of season market will be interesting this year.
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JoeRetire
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Re: Vacation home frenzy?

Post by JoeRetire »

Annabel Lee wrote: Sat May 15, 2021 4:31 pm Pretty sure these things are related and the strong rental market is driving higher purchase prices. However given finite supply, increased WFH even after things are back from normal, and how COVID has driven Americans back to nature, is it possible that we’re still in the early innings of this price rise?
Is it possible? Of course.
It it likely? (shrug)

I'm not convinced everything has changed permanently.
Just remember: it's not a lie if you believe it.
retiringwhen
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Re: Vacation home frenzy?

Post by retiringwhen »

eye.surgeon wrote: Mon May 17, 2021 11:11 am
pizzy wrote: Sat May 15, 2021 9:23 pm People are putting 5% or less down.
The actual average down payment during this current housing boom is 16%. That's up 33% from 2019.
The St. Louis FED has this graphic for Personal Savings Rates. The long-term decline turned around after 2005 and US households have much more money available for home purchases and the like today. The pandemic only improved the savings rate (amazingly! and for complicated reasons).

Buying houses and luxury goods is not a surprising consequence, especially after a decade of what in retrospect looks like a lot of deferred gratification at a national level. The real question is what will savings rates look like 12 mos. from now? Does the 2005+ trend continue or was the pandemic a discontinuity that will have a major long-term impact?

https://fred.stlouisfed.org/series/PSAVERT
Flannelbeard
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Re: Vacation home frenzy?

Post by Flannelbeard »

JoeRetire wrote: Fri Jun 04, 2021 4:46 am
Annabel Lee wrote: Sat May 15, 2021 4:31 pm Pretty sure these things are related and the strong rental market is driving higher purchase prices. However given finite supply, increased WFH even after things are back from normal, and how COVID has driven Americans back to nature, is it possible that we’re still in the early innings of this price rise?
Is it possible? Of course.
It it likely? (shrug)

I'm not convinced everything has changed permanently.
Agreed. IMO most of the people spouting off about "I'll quit if my company doesn't offer full time work from home" is empty bluster. It's their daydream fantasy of standing up to the man, but it won't work because most employees are not as valuable to their employer as they think they are.

There will probably be an elite contingent of knowledge workers, due to some balance of demand for workers in their industry and personal prowess who will keep WFH. For most normies it will be back to the office 4+ days per week at some point.
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Re: Vacation home frenzy?

Post by retiringwhen »

Flannelbeard wrote: Fri Jun 04, 2021 7:04 am There will probably be an elite contingent of knowledge workers, due to some balance of demand for workers in their industry and personal prowess who will keep WFH. For most normies it will be back to the office 4+ days per week at some point.
I have worked from home almost exclusively for over 15 years but with many years including extensive business travel (50-100 day/year). I can tell you that in most cases, it is not a place folks will want to be long-term due to the social isolation. The pandemic was surprisingly hard on my psyche due to the isolation after years of mixed home/travel. Most folks will want to be in the office eventually (or travel a lot like I did).

The reduced commuting time and costs and related costs are great to avoid, but truth is we are social animals and eventually require being around our colleagues.

Someone desiring a career advancement path, WFH has and will continue to be a career killer too.

My prediction is that a pretty significant portion of knowledge workers will end up with up to a 25% WFH regime in part to save on real estate and time, but they will still be in the office more than not and living far away from their jobs will only be in their dreams.

BTW, this is all targeted towards your normal MegaCorp or at least office-centric business. There are plenty of other jobs that remote work is often best (outside sales, consulting, digital-based services, etc.)
SQRT
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Re: Vacation home frenzy?

Post by SQRT »

I was just reading some articles about the inflation in rec properties. Looks like we have really lucked out on this as we own 3 such properties. No immediate plans to sell any of them Better to be lucky than smart anytime.
gogreen
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Re: Vacation home frenzy?

Post by gogreen »

Annabel Lee wrote: Sat May 15, 2021 4:31 pm
Pretty sure these things are related and the strong rental market is driving higher purchase prices. However given finite supply, increased WFH even after things are back from normal, and how COVID has driven Americans back to nature, is it possible that we’re still in the early innings of this price rise?

If not, what bursts this bubble?
Well, I can't forecast gov plans about (non)printing money.
If they stop, bubble will burst. In my area houses which have been listed and delisted for years (180-200 price range) are now sold as bargain for 350 :oops:
If they keep adding trillions - well, we might see same houses hitting 2 commas :confused
DoubleComma
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Re: Vacation home frenzy?

Post by DoubleComma »

Miguelito wrote: Sun May 23, 2021 8:17 pm People in America buy things on impulse. Can't travel? I have a great idea! let's buy a vacation home. Just a "few" more people than usual with that idea will move the market. Wait until those folks can fly again and they will realize they don't use the place as much and it costs more than they thought to upkeep, then they will sell. Vacation home markets are far more volatile for this reason.

I say 2022-2023 prices will go back to pre-COVID. Add the potential of rate increases and it could go down significantly more.
I’m hoping to upgrade wake boats again if this happens. Lots of high price high performance boats have been sold in the past year driving prices crazy high. Hopefully by next spring folks start thinking “I only used it for 30 hours, paid $250 month to store and cost me 6-figures to buy - I can rent cheaper than that”. Of course that’s when I show up with an all cash offer and steal my next boat!
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Re: Vacation home frenzy?

Post by manuvns »

it won't burst anytime soon due to large cash in the markets , high demand , low supply , high material cost , high labor cost , low interest rates . nothing is working in the right direction . i am trying to find more low cost real estate but cannot find one . I will keeep buying whenever i find properties with 10-20% equity in it .
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willthrill81
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Re: Vacation home frenzy?

Post by willthrill81 »

Annabel Lee wrote: Sat May 15, 2021 4:31 pm We are in the market for a vacation home in the Midwest and can confirm that the same features of a bubble that are present across the standard housing market are showing up for second houses; even in out-of-the-way locations. Multiple offers, escalation clauses and waived appraisals/inspections are the norm at our price point ($300k-$400k).
What you are describing is a strong seller's market. That is not the same as a bubble, where prices are going up purely on the basis of speculation. Prices around the country are generally going up due to a housing shortage, increased construction costs, increased construction time frames, and very low mortgage interest rates.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
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Re: Vacation home frenzy?

Post by SQRT »

willthrill81 wrote: Fri Jun 04, 2021 9:52 am
Annabel Lee wrote: Sat May 15, 2021 4:31 pm We are in the market for a vacation home in the Midwest and can confirm that the same features of a bubble that are present across the standard housing market are showing up for second houses; even in out-of-the-way locations. Multiple offers, escalation clauses and waived appraisals/inspections are the norm at our price point ($300k-$400k).
What you are describing is a strong seller's market. That is not the same as a bubble, where prices are going up purely on the basis of speculation. Prices around the country are generally going up due to a housing shortage, increased construction costs, increased construction time frames, and very low mortgage interest rates.
Probably correct. I would add another reason. Being the increased. attractiveness of vacation properties for people who can’t travel outside the county. Unfortunately, on our lake in Ontario about 10% of owners are Americans who can’t use their places. 2 summers now.
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willthrill81
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Re: Vacation home frenzy?

Post by willthrill81 »

SQRT wrote: Fri Jun 04, 2021 9:59 am
willthrill81 wrote: Fri Jun 04, 2021 9:52 am
Annabel Lee wrote: Sat May 15, 2021 4:31 pm We are in the market for a vacation home in the Midwest and can confirm that the same features of a bubble that are present across the standard housing market are showing up for second houses; even in out-of-the-way locations. Multiple offers, escalation clauses and waived appraisals/inspections are the norm at our price point ($300k-$400k).
What you are describing is a strong seller's market. That is not the same as a bubble, where prices are going up purely on the basis of speculation. Prices around the country are generally going up due to a housing shortage, increased construction costs, increased construction time frames, and very low mortgage interest rates.
Probably correct. I would add another reason. Being the increased. attractiveness of vacation properties for people who can’t travel outside the county. Unfortunately, on our lake in Ontario about 10% of owners are Americans who can’t use their places. 2 summers now.
That's another excellent reason.

Back in 2019, we vacationed on Vancouver island and also went up to Whistler, BC. I was surprised at how many vacation homes there were south of Whistler and learned that a great many of them are owned by those living in western Washington. For around 15 months now, those people haven't been able to visit their own property. :(
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
SQRT
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Re: Vacation home frenzy?

Post by SQRT »

willthrill81 wrote: Fri Jun 04, 2021 10:05 am
SQRT wrote: Fri Jun 04, 2021 9:59 am
willthrill81 wrote: Fri Jun 04, 2021 9:52 am
Annabel Lee wrote: Sat May 15, 2021 4:31 pm We are in the market for a vacation home in the Midwest and can confirm that the same features of a bubble that are present across the standard housing market are showing up for second houses; even in out-of-the-way locations. Multiple offers, escalation clauses and waived appraisals/inspections are the norm at our price point ($300k-$400k).
What you are describing is a strong seller's market. That is not the same as a bubble, where prices are going up purely on the basis of speculation. Prices around the country are generally going up due to a housing shortage, increased construction costs, increased construction time frames, and very low mortgage interest rates.
Probably correct. I would add another reason. Being the increased. attractiveness of vacation properties for people who can’t travel outside the county. Unfortunately, on our lake in Ontario about 10% of owners are Americans who can’t use their places. 2 summers now.
That's another excellent reason.

Back in 2019, we vacationed on Vancouver island and also went up to Whistler, BC. I was surprised at how many vacation homes there were south of Whistler and learned that a great many of them are owned by those living in western Washington. For around 15 months now, those people haven't been able to visit their own property. :(
Yes. Luckily for Canadians with snowbird places, we can still access our places by flying south. Southbound, only the land border is closed.
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Re: Vacation home frenzy?

Post by H-Town »

Annabel Lee wrote: Sat May 15, 2021 4:31 pm We are in the market for a vacation home in the Midwest and can confirm that the same features of a bubble that are present across the standard housing market are showing up for second houses; even in out-of-the-way locations. Multiple offers, escalation clauses and waived appraisals/inspections are the norm at our price point ($300k-$400k).

And by the way, if you want to rent a place for a week in the summer, forget about it - prices are through the roof (75-100% more than pre-pandemic) if places are even available at this point.

While our experience is in the Midwest I know this is similar in places like Tahoe, Cape Cod, FL etc.

Pretty sure these things are related and the strong rental market is driving higher purchase prices. However given finite supply, increased WFH even after things are back from normal, and how COVID has driven Americans back to nature, is it possible that we’re still in the early innings of this price rise?

If not, what bursts this bubble?
Ehh who care what gonna bursts this bubble. We have the money ready so we're in the driver seat. We buy when the housing market is down, we stand by and watch when the housing market is up...

It worked for us in 2009 when we bought our primary residence. It worked for us last March (pandemic started) when we bought our beach condo.
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Re: Vacation home frenzy?

Post by Wanderingwheelz »

Fortune favors the patient.

If you’re in the market for a vacation property and you are not in a rush, wait.
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changingtimes
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Re: Vacation home frenzy?

Post by changingtimes »

Wanderingwheelz wrote: Fri Jun 04, 2021 11:26 am Fortune favors the patient.

If you’re in the market for a vacation property and you are not in a rush, wait.
This is what I'm doing--especially because my target spot is precisely the sort of spot that people in a frenzy would say "Wow, this is great!" and then will probably decide they were overzealous and didn't give enough thought to location, weather, etc.
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Re: Vacation home frenzy?

Post by sschullo »

Wanderingwheelz wrote: Fri Jun 04, 2021 11:26 am Fortune favors the patient.

If you’re in the market for a vacation property and you are not in a rush, wait.
Patience is a powerful and mindful option in many of our affairs, not just financial.
Likewise, if you are selling a beautiful and spacious vacation home in this market and your agent says you're overpriced but you are not in a rush, wait.
"We have seen much more money made and kept by “ordinary people” who were temperamentally well suited for the investment process than by those who lacked this quality." Ben Graham
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Re: Vacation home frenzy?

Post by btenny »

There is a crazy feeding frenzy for properties in Tahoe. Homes that were selling for $700K a few years ago are now getting multiple offers of $1.2MM. JUNK cabins and small houses are selling for $500K. I have been there for 20 years and have a nice group of friends. HALF of them are selling out to take advantage of the huge prices and moving or becoming nomads. Many of these sales are to remote workers escaping the bay area. But these people do not ski or shovel snow or know how to deal with big winter storms. It will be interesting next winter. They all think they can rent the places or AirbNb to help with costs. But the city passed rules limiting rental places so many of these people cannot rent. SO I see them with big issues in 2 years or so. Prices went down in 2008 and sales tanked. This could happen again. But who knows..............
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