Tales from this insane real estate market [Home sales]

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dogagility
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Re: Tales from this insane real estate market

Post by dogagility »

rage_phish wrote: Fri Apr 09, 2021 8:12 pm Bought out house for $580k 6 years ago

Listed it last week for $800k

After 5 days we had 14 offers and accepted one for $935k

Very happy with the outcome :)
Sweet! Any icing on the cake... no contingencies and cash buyer? :sharebeer
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ASpenderInRecovery
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Re: Tales from this insane real estate market

Post by ASpenderInRecovery »

rage_phish wrote: Fri Apr 09, 2021 8:12 pm Bought out house for $580k 6 years ago

Listed it last week for $800k

After 5 days we had 14 offers and accepted one for $935k

Very happy with the outcome :)
Congrats! That extra 135k will come in handy.
edgeagg
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Re: Tales from this insane real estate market

Post by edgeagg »

Our tenant in our rental home in Seattle is moving out at the end of the month. Time to do fixups and put on the market. We bought the home for $700K about 18 years ago, our likely list is going to be $1.9m (house has a great view of Puget Sound).

I'm just not comfortable having this much $ locked up in a single "investment" - FWIW I don't think of a home as an investment.
rage_phish
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Re: Tales from this insane real estate market

Post by rage_phish »

dogagility wrote: Sat Apr 10, 2021 4:12 am
rage_phish wrote: Fri Apr 09, 2021 8:12 pm Bought out house for $580k 6 years ago

Listed it last week for $800k

After 5 days we had 14 offers and accepted one for $935k

Very happy with the outcome :)
Sweet! Any icing on the cake... no contingencies and cash buyer? :sharebeer

The only contingency was for an inspection. But contract stated they were buying house as is and inspection was simply for their own knowledge. They released contingencies yesterday
IMD801
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Re: Tales from this insane real estate market

Post by IMD801 »

Next door house got bulldozed a few years ago (was worth about $300k) and replaced with ugly McMansion box with no yard. Just sold for $1.6 million.

House across the street sold for $400k-ish five years ago. Sold for $985k in one day with bidding wars.

Old but large (~3800 sq ft) down the street that was only partially redone but still kind of junky in parts sold for $1.4 million two weeks ago.

And on...and on...

This area was full of $250k-350k houses 10 years ago. :shock:
mceagle555
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Re: Tales from this insane real estate market

Post by mceagle555 »

rage_phish wrote: Fri Apr 09, 2021 8:12 pm Bought out house for $580k 6 years ago

Listed it last week for $800k

After 5 days we had 14 offers and accepted one for $935k

Very happy with the outcome :)
What approx location?
rage_phish
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Re: Tales from this insane real estate market

Post by rage_phish »

mceagle555 wrote: Sat Apr 10, 2021 5:31 pm
rage_phish wrote: Fri Apr 09, 2021 8:12 pm Bought out house for $580k 6 years ago

Listed it last week for $800k

After 5 days we had 14 offers and accepted one for $935k

Very happy with the outcome :)
What approx location?

SF East bay suburbs
Calidude
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Re: Tales from this insane real estate market

Post by Calidude »

Shalom Aleichem wrote: Thu Apr 08, 2021 7:54 pm
jcricket73 wrote: Sat Apr 03, 2021 3:18 pm
Shalom Aleichem wrote: Fri Apr 02, 2021 9:03 pm I think there's a big difference though as to WHO is moving where. Are job creators moving in or out of CA? Texas? I don't know where to look it up but my gut tells me - as well as many discussions with regular folk - people with jobs and job creators are moving out of the high tax, no reward for high tax areas (CA, NY, NJ, IL) and moving to lower tax areas where the schools and streets are no worse and often better (TX, TN, FL).
Not matching my evidence, nor flows or returns for venture capital dollars, which is one measure of where people anticipate job creation happening. VC investment still skews heavily to CA, NY, MA, with only TX being the "low tax" exception. Other states high on the list include WA. Or look at megacorp Amazon, who hates taxes. They picked Northern Virginia as their second headquarters and have expanded in Boston and New York.

And I've seen one study that showed the people most likely to be leaving CA for TX, are mid to low-earners. Perhaps it's just high profile Musk types who dominate the news. That kind of "below median wage can't afford it here anymore" outflow has its own consequences, not all of it good for the states they're leaving either.

Plenty to argue about, I'm sure, but I'm pretty sure your "no reward for high taxes" statement is a disputable, personal opinion, not a statement of fact.
I doubt either of us can find good data. My gut of course tells me that job creation - I don't mean small VC startups, I mean large numbers of jobs - are moving from high tax to low tax states. I don't know what metric would be a good measure but the U-haul index (or whatever you want to call it) of people moving out of CA to TX seems not unreasonable...

https://www.kxan.com/news/local/austin/ ... n-reverse/
United Van Lines has their data on this and it goes into some detail about why people move in and out of states. The numbers for Texas are pretty balanced across the board (eg half of inbound moves are for jobs and half of outbound moves are for jobs). This is true across pretty much all demographic categories and for all reasons. If you look at California and Florida it's more differentiated. Retirees are over-represented in people leaving CA and moving to FL. Far more people move to CA for jobs than away. Also, people who leave tend to have lower income than people who move to CA. Finally, I should note that this ignores international immigration which has always been drive of population growth in California.
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unclescrooge
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Re: Tales from this insane real estate market

Post by unclescrooge »

edgeagg wrote: Sat Apr 10, 2021 6:46 am Our tenant in our rental home in Seattle is moving out at the end of the month. Time to do fixups and put on the market. We bought the home for $700K about 18 years ago, our likely list is going to be $1.9m (house has a great view of Puget Sound).

I'm just not comfortable having this much $ locked up in a single "investment" - FWIW I don't think of a home as an investment.
I'm of similar mind, except I wouldn't want to sell my home and incur taxes.

So I'm in the middle of a cash out refi. Looking to pull out $600k and pay down business loans and invest the excess.
goingback
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Re: Tales from this insane real estate market

Post by goingback »

Bought 5,200sqft in 30005 zip for 560k 1 year ago
Realtor put ”Coming Soon” sign yesterday
Already got 1 tour with it not yet even listed.
Thinking on announcing it for 630k. Expecting to sell it over price.
edgeagg
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Re: Tales from this insane real estate market

Post by edgeagg »

goingback wrote: Sat Apr 10, 2021 8:26 pm Bought 5,200sqft in 30005 zip for 560k 1 year ago
5200 sf for $300K? Where do you live - maybe I need to move!! :P
fareastwarriors
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Re: Tales from this insane real estate market

Post by fareastwarriors »

goingback wrote: Sat Apr 10, 2021 8:26 pm Bought 5,200sqft in 30005 zip for 560k 1 year ago
Realtor put ”Coming Soon” sign yesterday
Already got 1 tour with it not yet even listed.
Thinking on announcing it for 630k. Expecting to sell it over price.

5200 sq ft is a lot of space. Do you hire cleaners to keep up?
I'd be too lazy do that much cleaning. lol
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Watty
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Re: Tales from this insane real estate market

Post by Watty »

edgeagg wrote: Mon Apr 12, 2021 10:32 am
goingback wrote: Sat Apr 10, 2021 8:26 pm Bought 5,200sqft in 30005 zip for 560k 1 year ago
5200 sf for $300K? Where do you live - maybe I need to move!! :P
goingback wrote: Sat Apr 10, 2021 8:26 pm Thinking on announcing it for 630k. Expecting to sell it over price.
That is the North Atlanta Suburbs, not sure where you got the $300K number from since in their post they said that they would likely list it for $630K and likely get more than that.

That sounds reasonable and not all that unusual for that area but often houses with a lot of square footage like that will have a finished basement which counts in the square footage.

That area is also a desirable area since many of the schools are good and there are a lot of tech companies in the north Atlanta Suburbs. That area is a lot less expensive than some other prime or downtown areas so it is not like all Atlanta housing is inexpensive.

They do like houses big in Atlanta.

When we moved here we had a really hard time finding a nice reasonable size house in the 2,000 square foot range that was in a good area that had a good lot.

House prices have been going up a lot and there is very little inventory for lower priced houses. I have not seen any statistics for this spring but I suspect that they have gone up a lot in the last few months.

I have not heard any details but a house up the street from was sold to a family from California about two months ago for about 10% more than I thought it was worth.
anoop
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Re: Tales from this insane real estate market

Post by anoop »

I can no longer afford to buy the house that I'm living in. Over the 6 years I've owned it, my income has gone up around 10%, the job is shaky as ever, and house price has gone up about 40%.
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unclescrooge
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Re: Tales from this insane real estate market

Post by unclescrooge »

anoop wrote: Tue Apr 13, 2021 12:12 pm I can no longer afford to buy the house that I'm living in. Over the 6 years I've owned it, my income has gone up around 10%, the job is shaky as ever, and house price has gone up about 40%.
What your down payment? If invested, how much would that have grown along with additional savings? Also, what about the decline in interest rates? Would that have given you additional buying power?
anoop
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Re: Tales from this insane real estate market

Post by anoop »

unclescrooge wrote: Tue Apr 13, 2021 1:54 pm
anoop wrote: Tue Apr 13, 2021 12:12 pm I can no longer afford to buy the house that I'm living in. Over the 6 years I've owned it, my income has gone up around 10%, the job is shaky as ever, and house price has gone up about 40%.
What your down payment? If invested, how much would that have grown along with additional savings? Also, what about the decline in interest rates? Would that have given you additional buying power?
I bought it without a mortgage. The money I used to buy it was sitting in high yield savings earning < 1%.
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Ketawa
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Re: Tales from this insane real estate market

Post by Ketawa »

anoop wrote: Tue Apr 13, 2021 1:56 pm
unclescrooge wrote: Tue Apr 13, 2021 1:54 pm
anoop wrote: Tue Apr 13, 2021 12:12 pm I can no longer afford to buy the house that I'm living in. Over the 6 years I've owned it, my income has gone up around 10%, the job is shaky as ever, and house price has gone up about 40%.
What your down payment? If invested, how much would that have grown along with additional savings? Also, what about the decline in interest rates? Would that have given you additional buying power?
I bought it without a mortgage. The money I used to buy it was sitting in high yield savings earning < 1%.
It sure sounds like you could afford it today. You'd put down 71% (100%/140%), and you'd finance the remaining 29% at extremely low interest rates with your income that approximately kept up with inflation.
anoop
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Re: Tales from this insane real estate market

Post by anoop »

Ketawa wrote: Tue Apr 13, 2021 9:56 pm
anoop wrote: Tue Apr 13, 2021 1:56 pm
unclescrooge wrote: Tue Apr 13, 2021 1:54 pm
anoop wrote: Tue Apr 13, 2021 12:12 pm I can no longer afford to buy the house that I'm living in. Over the 6 years I've owned it, my income has gone up around 10%, the job is shaky as ever, and house price has gone up about 40%.
What your down payment? If invested, how much would that have grown along with additional savings? Also, what about the decline in interest rates? Would that have given you additional buying power?
I bought it without a mortgage. The money I used to buy it was sitting in high yield savings earning < 1%.
It sure sounds like you could afford it today. You'd put down 71% (100%/140%), and you'd finance the remaining 29% at extremely low interest rates with your income that approximately kept up with inflation.
That's using leverage. In strict terms, if my budget for a house is $x at an income of $y, at $1.1*y, the house I can afford is no more than $1.1*x. At my current age (50) and with the way things are going at my work and my health issues, I would not feel comfortable taking on a mortgage. Keep in mind that with the increase price come increased property taxes. I would probably be forced to buy a cheaper house, and given how those are being bought right now, there's probably no way I'd be able to get one.
tim1999
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Re: Tales from this insane real estate market

Post by tim1999 »

This morning I was at an independent motor vehicle service agent place to help a relative get a duplicate car title for one they had lost, since our state-run motor vehicle offices are still closed to the public. This particular place also does car title loans. There was a woman probably in her 60s-70s taking out a $7,000 title loan on her car so her son could use the money towards closing costs on his first house purchase. I know this because she was loudly telling her whole story to the clerk within earshot of about 10 people in the waiting room. When it was my turn, I inquired what the rate was on a $7,000 title loan, and was told this place charges the state regulated maximum which is 120% APR. Not 12.0 as in twelve, 120 as in one hundred twenty percent :oops:

She was also proud that her son just got his credit score into the 600s.
anoop
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Re: Tales from this insane real estate market

Post by anoop »

Calculated Risk doesn't think the boom as bad as the housing bubble.
https://www.calculatedriskblog.com/2021 ... iller.html
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btq96r
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Re: Tales from this insane real estate market

Post by btq96r »

I'm living this carnival ride at the moment.

Coming up on my 39th birthday, I figure it's time to buy my first house. I really do love the location of the apartment I'm currently renting, but it's costing equity with each month's rent payment. Having a very healthy down payment built up through taxable mutual funds, a good paying job, and no debt to speak of, I figured this should be fairly easy and a bit of a learning experience.

Then I saw how things are going in the real estate market lately. Oh, and I live in the Nashville area, where U-Haul's from California seem to be getting tractor beamed into.

I've had to adjust my expectations, my budget (I was trying to stick to the Dave Ramsey 25% of take home income for a mortgage of a purchase price no more than 3x of annual income), and really my perception of the entire process. It's quite off-putting to have your mind in a place you think you've worked hard to save up for, then realize you're going to have to pay more money for less home and land. I know this is the right long term move, but it feels like a kick in the junk to start.
Stormbringer
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Re: Tales from this insane real estate market

Post by Stormbringer »

At present, this real estate market is nothing like the lead up to 2008-2009. The housing market crash back then was caused by oversupply, and the financial crisis that followed was the consequence of low lending standards.

Today's market is defined by by a lack of supply, coupled with low interest rates that allow buyers to bid up prices while maintaining a monthly payment they can afford. We have been building too few homes for the past decade, even as the population has continued to grow and the Millennials reach home-buying age.

Here is the supply trend in my local metro area:

Image

Increasing the supply is a slow process that will take many years to unfold. It is constrained by labor shortages, land shortages in some areas, land-use restrictions and construction material costs.

In the short to medium term, prices are going to continue to rise until homes become sufficiently unaffordable that buyers exit the market and supply and demand reach equilibrium. Rising interest rates could accelerate this process somewhat. I think a collapse in prices is unlikely, barring some sort of shock to the system such as a massive spike in rates, a decade of overbuilding, or another severe recession.
“The greatest shortcoming of the human race is our inability to understand the exponential function.” - Albert Allen Bartlett
stoptothink
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Re: Tales from this insane real estate market

Post by stoptothink »

btq96r wrote: Sun Apr 18, 2021 12:03 amOh, and I live in the Nashville area, where U-Haul's from California seem to be getting tractor beamed into.
Found out yesterday that my new next-door neighbor (in Utah) moved here from California, that makes 5 of the 8 homes on my block owned by families who are California natives.
vfinx
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Re: Tales from this insane real estate market

Post by vfinx »

In my vhocl area, around 2018/2019 prices dropped pretty significantly but it happened quietly, relatively speaking. My realtor acquaintances told me that buyers just got fed up, and decided to stop spending all their time getting into bidding wars, usually losing. I think that’s what’s going to happen again, and pretty soon. It won’t be a dramatic pop of a bubble, but the price declines will be significant over a long period of time. I know of several buyers in my circle who have already given up. They were burning every weekend looking at houses, and decided it’s just not worth the effort. Also, now that they’re vaccinated, they’ve started to focus on other activities that they had halted before, and I suspect the desire to purchase a big home diminishes when you’re out in the world, instead of being stuck inside.
investingfan
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Re: Tales from this insane real estate market

Post by investingfan »

stoptothink wrote: Sun Apr 18, 2021 9:26 am
btq96r wrote: Sun Apr 18, 2021 12:03 amOh, and I live in the Nashville area, where U-Haul's from California seem to be getting tractor beamed into.
Found out yesterday that my new next-door neighbor (in Utah) moved here from California, that makes 5 of the 8 homes on my block owned by families who are California natives.

Just moved back where they came from. Only 56% of Californians were born in the state according to this research.

https://calmatters.org/explainers/calif ... migration/
Firemenot
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Re: Tales from this insane real estate market

Post by Firemenot »

investingfan wrote: Sun Apr 18, 2021 1:52 pm
stoptothink wrote: Sun Apr 18, 2021 9:26 am
btq96r wrote: Sun Apr 18, 2021 12:03 amOh, and I live in the Nashville area, where U-Haul's from California seem to be getting tractor beamed into.
Found out yesterday that my new next-door neighbor (in Utah) moved here from California, that makes 5 of the 8 homes on my block owned by families who are California natives.

Just moved back where they came from. Only 56% of Californians were born in the state according to this research.

https://calmatters.org/explainers/calif ... migration/
It’s interesting that for years I’ve been reading about the exodus of Californians to Boise, Phoenix, Denver, Austin, Nashville, and Salt Lake City. And how cheap it is to get a U-Haul into CA and how expensive to get one out of CA. Yet all my real estate prices in coastal CA area have done is EXPLODE. I’m a couple of blocks away from the ocean in a not so urban area so maybe that explains it.
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FIREchief
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Re: Tales from this insane real estate market

Post by FIREchief »

btq96r wrote: Sun Apr 18, 2021 12:03 am I figure it's time to buy my first house.

I know this is the right long term move, but it feels like a kick in the junk to start.
How do you "know" that this is the right long term move?
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
tfunk
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Re: Tales from this insane real estate market

Post by tfunk »

anoop wrote: Wed Apr 14, 2021 4:21 pm Calculated Risk doesn't think the boom as bad as the housing bubble.
https://www.calculatedriskblog.com/2021 ... iller.html
The author states this boom is similar to the late 70's or late 80's but nothing like the housing bubble.

We bought our first house in the LA area in 1989. Low inventory, multiple people touring open houses. Not with offers over listing price like now but still a frenzy to buy. We paid $240,000. Immediately went down in value it seemed at the time - three years later we got it reappraised for $190,000 in order to reduce our taxes - a 20% reduction in value. Finally sold it 14 years later in 2003 for $352,000 - about 3% appreciation per year from our purchase price. Zillow says it is worth $840,000 now. About 4.75% increase annually including the 2008-2009 bust (14% in just the last year alone).

Point being, house values go up, they go down. Buying a house should satisfy a need for stability and building up equity long term. Short term (3-5 years), no one knows where prices will go. You have to be lucky to buy at the bottom or unlucky to buy at the top.
anoop
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Re: Tales from this insane real estate market

Post by anoop »

tfunk wrote: Sun Apr 18, 2021 3:44 pm
anoop wrote: Wed Apr 14, 2021 4:21 pm Calculated Risk doesn't think the boom as bad as the housing bubble.
https://www.calculatedriskblog.com/2021 ... iller.html
The author states this boom is similar to the late 70's or late 80's but nothing like the housing bubble.

We bought our first house in the LA area in 1989. Low inventory, multiple people touring open houses. Not with offers over listing price like now but still a frenzy to buy. We paid $240,000. Immediately went down in value it seemed at the time - three years later we got it reappraised for $190,000 in order to reduce our taxes - a 20% reduction in value. Finally sold it 14 years later in 2003 for $352,000 - about 3% appreciation per year from our purchase price. Zillow says it is worth $840,000 now. About 4.75% increase annually including the 2008-2009 bust (14% in just the last year alone).

Point being, house values go up, they go down. Buying a house should satisfy a need for stability and building up equity long term. Short term (3-5 years), no one knows where prices will go. You have to be lucky to buy at the bottom or unlucky to buy at the top.
During the last cycle CR was able to call the bottom based mainly on inventory trends but also other factors.

The problem is it is very hard to buy at the bottom — new construction sells at a significant premium to the market value and existing houses typically go for all cash without even being seen.

Near the tops there is huge inventory build up.
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Beensabu
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Re: Tales from this insane real estate market

Post by Beensabu »

Firemenot wrote: Sun Apr 18, 2021 1:55 pm It’s interesting that for years I’ve been reading about the exodus of Californians to Boise, Phoenix, Denver, Austin, Nashville, and Salt Lake City. And how cheap it is to get a U-Haul into CA and how expensive to get one out of CA. Yet all my real estate prices in coastal CA area have done is EXPLODE. I’m a couple of blocks away from the ocean in a not so urban area so maybe that explains it.
Housing doesn't get less expensive in desirable areas because people are leaving. People leave because housing is getting too expensive for them to be able to afford. Other people who can afford it come in.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
IfIOnlyKnew
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Re: Tales from this insane real estate market

Post by IfIOnlyKnew »

tim1999 wrote: Wed Apr 14, 2021 4:18 pm This morning I was at an independent motor vehicle service agent place to help a relative get a duplicate car title for one they had lost, since our state-run motor vehicle offices are still closed to the public. This particular place also does car title loans. There was a woman probably in her 60s-70s taking out a $7,000 title loan on her car so her son could use the money towards closing costs on his first house purchase. I know this because she was loudly telling her whole story to the clerk within earshot of about 10 people in the waiting room. When it was my turn, I inquired what the rate was on a $7,000 title loan, and was told this place charges the state regulated maximum which is 120% APR. Not 12.0 as in twelve, 120 as in one hundred twenty percent :oops:

She was also proud that her son just got his credit score into the 600s.
Something makes me think this woman and her son are not bogleheads. :wink:
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Watty
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Re: Tales from this insane real estate market

Post by Watty »

tfunk wrote: Sun Apr 18, 2021 3:44 pm We bought our first house in the LA area in 1989. Low inventory, multiple people touring open houses. Not with offers over listing price like now but still a frenzy to buy. We paid $240,000. Immediately went down in value it seemed at the time - three years later we got it reappraised for $190,000 in order to reduce our taxes - a 20% reduction in value. Finally sold it 14 years later in 2003 for $352,000 - about 3% appreciation per year from our purchase price. Zillow says it is worth $840,000 now. About 4.75% increase annually including the 2008-2009 bust (14% in just the last year alone).
Adjusted for inflation there was barely any real annual return. $240K in 1989 is worth $525K today.

https://www.bls.gov/data/inflation_calculator.htm
PhoebeCoco
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Re: Tales from this insane real estate market

Post by PhoebeCoco »

KlangFool wrote: Wed Mar 24, 2021 12:33 pm
I buy a house assuming ZERO appreciation. Aka, it is significantly cheaper than renting. As per my rule, I buy a house when the PITI is 20% to 30% lowered than renting. The PITI is based on 20% down payment and 30 years fixed-rate mortgage. If you do that, you make money purely on imputed rent. You make money when you buy.

I bought my house based on this rule. The PITI was around $1,800 per month. The rent was around $2,300 per month.

Do not buy unless it is significantly cheaper than renting.

KlangFool
Thank you, KlangFool, for this formula. I have been house hunting, and, using this formula, found houses in similar neighborhoods that are cheaper to rent than to buy, and yet there are multiple offers on the houses that are for sale. :confused

I too have seen a family member severely financially stressed by owning two homes; family member bought house in Location A, got better job in Location B, could not sell Location A house for years, paid two mortgages during that time.
KlangFool
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Re: Tales from this insane real estate market

Post by KlangFool »

PhoebeCoco wrote: Mon Apr 19, 2021 12:18 pm
KlangFool wrote: Wed Mar 24, 2021 12:33 pm
I buy a house assuming ZERO appreciation. Aka, it is significantly cheaper than renting. As per my rule, I buy a house when the PITI is 20% to 30% lowered than renting. The PITI is based on 20% down payment and 30 years fixed-rate mortgage. If you do that, you make money purely on imputed rent. You make money when you buy.

I bought my house based on this rule. The PITI was around $1,800 per month. The rent was around $2,300 per month.

Do not buy unless it is significantly cheaper than renting.

KlangFool
Thank you, KlangFool, for this formula. I have been house hunting, and, using this formula, found houses in similar neighborhoods that are cheaper to rent than to buy, and yet there are multiple offers on the houses that are for sale. :confused

I too have seen a family member severely financially stressed by owning two homes; family member bought house in Location A, got better job in Location B, could not sell Location A house for years, paid two mortgages during that time.
PhoebeCoco,

1) Isn't it obvious? The answer is the house is at wrong price for you to buy. As to why others choose to what they do, the answer is obvious too. Most people are "house poor". Most people save less than 5% of their gross income. Most people overspend on the big items: house, car, and college education.

2) And, it is a good thing. This how you find your bargain later. Folks that are overstretched financially and has to sell at any price.

3) I do not wish any bad stuff on anyone. But, this is no way to save someone that refused to be saved.

KlangFool
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FIREchief
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Re: Tales from this insane real estate market

Post by FIREchief »

KlangFool wrote: Mon Apr 19, 2021 12:37 pm 1) Isn't it obvious? The answer is the house is at wrong price for you to buy. As to why others choose to what they do, the answer is obvious too. Most people are "house poor". Most people save less than 5% of their gross income. Most people overspend on the big items: house, car, and college education.
Well stated. There's a feeding frenzy going on right now in real estate. When they've asked me, I've encouraged our adult children not to buy, and this before this current madness. I've owned three houses myself, and owning a home s$$ks even when prices are reasonable.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
jcricket73
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Re: Tales from this insane real estate market

Post by jcricket73 »

Beensabu wrote: Sun Apr 18, 2021 5:10 pm
Firemenot wrote: Sun Apr 18, 2021 1:55 pm It’s interesting that for years I’ve been reading about the exodus of Californians to Boise, Phoenix, Denver, Austin, Nashville, and Salt Lake City. And how cheap it is to get a U-Haul into CA and how expensive to get one out of CA. Yet all my real estate prices in coastal CA area have done is EXPLODE. I’m a couple of blocks away from the ocean in a not so urban area so maybe that explains it.
Housing doesn't get less expensive in desirable areas because people are leaving. People leave because housing is getting too expensive for them to be able to afford. Other people who can afford it come in.
^^ This! It's why you have to dive into the cross-tabs to see "who" is leaving (what types of jobs/income levels) and understand co-variants like the amount of building (or lack thereof) to understand what's going on with housing prices in any metro area.

California - and now it seems the Pacific Northwest where I've lived for a while - have this relatively low-level of building and restrictive zoning (not arguing it's good or bad, it just is), despite a growing population of increasingly well-off folks willing to pay top-dollar to live close to their jobs in SFHs. That's driving up prices, even as total state population isn't increasing that much.

The reason total population isn't going up that much, is an almost equal number of folks with median or lower incomes are leaving either the metro-areas or the states, because they can't afford/don't like the changes. It's how places like London, Paris, Hong Kong, New York, etc seem to also defy gravity (relatively static total population, or in some cases mild net exodus, yet prices keep going up). Mix-shift in population income levels.

So you can have articles that are both true at the same time "People flee <expensive city X>, net population is down" and "Prices rise 10% year over year in <expensive city X>, no relief in site" - guess it depends on your perspective what this all means and whether it's good or bad for the location.
ballons
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Re: Tales from this insane real estate market

Post by ballons »

Stormbringer wrote: Sun Apr 18, 2021 7:35 am At present, this real estate market is nothing like the lead up to 2008-2009. The housing market crash back then was caused by oversupply, and the financial crisis that followed was the consequence of low lending standards.

Today's market is defined by by a lack of supply, coupled with low interest rates that allow buyers to bid up prices while maintaining a monthly payment they can afford. We have been building too few homes for the past decade, even as the population has continued to grow and the Millennials reach home-buying age.

Here is the supply trend in my local metro area:

Increasing the supply is a slow process that will take many years to unfold. It is constrained by labor shortages, land shortages in some areas, land-use restrictions and construction material costs.

In the short to medium term, prices are going to continue to rise until homes become sufficiently unaffordable that buyers exit the market and supply and demand reach equilibrium. Rising interest rates could accelerate this process somewhat. I think a collapse in prices is unlikely, barring some sort of shock to the system such as a massive spike in rates, a decade of overbuilding, or another severe recession.
So annual 20% price increases is the new paradigm for years to come? It's different this time™.
AS7911
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Re: Tales from this insane real estate market

Post by AS7911 »

rage_phish wrote: Sat Apr 10, 2021 8:24 am

The only contingency was for an inspection. But contract stated they were buying house as is and inspection was simply for their own knowledge. They released contingencies yesterday
Dont fully understand this comment. If the inspection had no relevance to the sale, why is it in the contract? I've heard there is something that essentially a Y/N inspection, where you can still decline the sale going thru, but can't ask for the seller to make repairs or reduce price. Is that what this was?
BillWalters
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Re: Tales from this insane real estate market

Post by BillWalters »

Unless land use rules drastically change in desirable areas home prices aren’t going to come down. This is not being fueled by lax underwriting or even low rates - buyers are very well qualified and often pay cash.
tfunk
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Re: Tales from this insane real estate market

Post by tfunk »

Watty wrote: Mon Apr 19, 2021 6:55 am
tfunk wrote: Sun Apr 18, 2021 3:44 pm We bought our first house in the LA area in 1989. Low inventory, multiple people touring open houses. Not with offers over listing price like now but still a frenzy to buy. We paid $240,000. Immediately went down in value it seemed at the time - three years later we got it reappraised for $190,000 in order to reduce our taxes - a 20% reduction in value. Finally sold it 14 years later in 2003 for $352,000 - about 3% appreciation per year from our purchase price. Zillow says it is worth $840,000 now. About 4.75% increase annually including the 2008-2009 bust (14% in just the last year alone).
Adjusted for inflation there was barely any real annual return. $240K in 1989 is worth $525K today.

https://www.bls.gov/data/inflation_calculator.htm

Thank you, you make my point. Zillow says it is worth $840,000 today - quite a bit more than inflation would account for.
Stormbringer
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Re: Tales from this insane real estate market

Post by Stormbringer »

ballons wrote: Mon Apr 19, 2021 2:58 pm So annual 20% price increases is the new paradigm for years to come? It's different this time™.
I doubt it. It certainly isn't what I said.
“The greatest shortcoming of the human race is our inability to understand the exponential function.” - Albert Allen Bartlett
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btq96r
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Re: Tales from this insane real estate market

Post by btq96r »

FIREchief wrote: Sun Apr 18, 2021 2:10 pm
btq96r wrote: Sun Apr 18, 2021 12:03 am I figure it's time to buy my first house.

I know this is the right long term move, but it feels like a kick in the junk to start.
How do you "know" that this is the right long term move?
Having ~22% of my annual income spent in rent as a irrecoverable expense versus a comparatively low mortgage payment that lets me build equity in what is presumed to be an appreciating asset over time seems the right long term move. I'm sure there's some high speed math formula that will make it debatable, but I'm only seeing the trade of that money each month (for what I admit is very good shelter and convenience of commute) as a handicap on my growing my net worth. There's also the safety in locking that mortgage payment in for a prolonged period while rent's have the very real risk of continuing to rise.
ballons
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Re: Tales from this insane real estate market

Post by ballons »

Stormbringer wrote: Tue Apr 20, 2021 8:48 am
ballons wrote: Mon Apr 19, 2021 2:58 pm So annual 20% price increases is the new paradigm for years to come? It's different this time™.
I doubt it. It certainly isn't what I said.
Stormbringer wrote: Increasing the supply is a slow process that will take many years to unfold.
Low supply = 20% annual jump in prices. You predict that low supply will take many years to fix. We've already crossed the sufficiently unaffordable line.


https://www.realtor.com/news/trends/hig ... ance-ends/
"The share of those who are significantly delinquent, so they're more than 90 days behind on payments, is actually higher than the rate during the foreclosure crisis" in the aughts, says Choi.

But she's optimistic that another wave of foreclosures won't materialize. Sky-high prices provide a solid protective cushion for homeowners. Nationally, median home list prices rose 13.7% from February 2020, just before the pandemic began, to this past February, according to realtor.com® data.

"They have the option to sell the properties and move to a more affordable unit," she says. "Or in the worst-case scenario, they'll have to switch to rental housing."
You said this was nothing like 2007. So long as prices keep going up and the music keeps playing, everything is okay. If the music stops...
KlangFool
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Re: Tales from this insane real estate market

Post by KlangFool »

btq96r wrote: Tue Apr 20, 2021 12:29 pm
FIREchief wrote: Sun Apr 18, 2021 2:10 pm
btq96r wrote: Sun Apr 18, 2021 12:03 am I figure it's time to buy my first house.

I know this is the right long term move, but it feels like a kick in the junk to start.
How do you "know" that this is the right long term move?
Having ~22% of my annual income spent in rent as a irrecoverable expense versus a comparatively low mortgage payment that lets me build equity in what is presumed to be an appreciating asset over time seems the right long term move. I'm sure there's some high speed math formula that will make it debatable, but I'm only seeing the trade of that money each month (for what I admit is very good shelter and convenience of commute) as a handicap on my growing my net worth. There's also the safety in locking that mortgage payment in for a prolonged period while rent's have the very real risk of continuing to rise.
btq96r,

A) Can it appreciates enough to beat the INCREASE RISK of an illiquid house?

B) Can it beats the average annual return of 7% of a 60/40 portfolio? What are the additional amount every month that you need to pay for the house above the rent? What is the opportunity cost of the money?

C) Can you max up all your tax-advantaged accounts after buying the house? If not, you are paying additional 20+% to 30+% taxes for all your additional housing expense. How much more the house needs to appreciate to break even?

I have no problem buying my existing house because the PITI is 20% to 30% lowered than renting. I make money by imputed rent. The house does not need to appreciate. I make money when I buy.

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Room604
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Re: Tales from this insane real estate market

Post by Room604 »

I think some of these people have so much money, they just don't care how much it costs to fix things.
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btq96r
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Re: Tales from this insane real estate market

Post by btq96r »

KlangFool wrote: Tue Apr 20, 2021 12:59 pm btq96r,

A) Can it appreciates enough to beat the INCREASE RISK of an illiquid house?

B) Can it beats the average annual return of 7% of a 60/40 portfolio? What are the additional amount every month that you need to pay for the house above the rent? What is the opportunity cost of the money?

C) Can you max up all your tax-advantaged accounts after buying the house? If not, you are paying additional 20+% to 30+% taxes for all your additional housing expense. How much more the house needs to appreciate to break even?

I have no problem buying my existing house because the PITI is 20% to 30% lowered than renting. I make money by imputed rent. The house does not need to appreciate. I make money when I buy.

KlangFool
A) In the Nashville Metro Area...I would say yes. If that doesn't happen, there would be a regional (or national) economic calamity of extended proportions given what's in progress now.

B) That I'm not sure of; wage inflation in the area would most likely drive that. But I also feel the rent I pay has a negative value that would need to be factored in since that's straight expense instead of investment or equity build.

I won't pay more per month than I am in rent, and my current budget for a mortgage (including insurance and property taxes) has me paying $200 less per month for the home than the rent if I buy at the top of my price range for the down payment I have available with current interest rates.

So, the only money I see as being an apples to apples comparison for opportunity cost is my down payment, the difference between current rent mortgage payment, and a ledger of repair/upkeep costs that would be a rental company's responsibility.

C) Monthly budget model as mentioned above has maxing out of tax-advantaged accounts built in. Those represent my hard decks to buying as it were. Buying is preferable than renting if the cost per month is less, and I can still max out tax-advantaged accounts.

I'm not at the PITI range you're in, but if I can lock in the mortgage cost, salary increases should build up to that gap over time
Broken Man 1999
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Re: Tales from this insane real estate market

Post by Broken Man 1999 »

It is a spectacle to behold, for sure.

I'm glad DW and I and DDs can observe the craziness from the sidelines. DW and I have no mortgage, and DDs have low interest rate mortgages, via refinancing.

Glad none of us are trying to find a home for our families.

At least around the Tampa side of Tampa Bay, there is lots of construction going on, so some folks have a chance at new construction.

Room604 wrote: I think some of these people have so much money, they just don't care how much it costs to fix things.

I think you have a valid point. DINKs are able to throw down some serious coin to get what they want. And, if a first-time buyer, the RE crash probably means nothing to them. Hopefully they won't experience a RE crash themselves.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go." - Mark Twain
ballons
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Re: Tales from this insane real estate market

Post by ballons »

Flannelbeard wrote: Tue Apr 20, 2021 1:29 pm Just went to look at a nearly 300 year old farmhouse in MA this past weekend. The pictures were great. Until we actually got to the home. Open house was packed as expected.

https://www.redfin.com/MA/Pepperell/108 ... e/11436763

The basement was frightening. The support beams were rotting away! There was one area where the owner had stacked in a bunch of 1/16" balsa board which looked like it was bearing a load under the dining room. There were temporary telescoping jacks all throughout the basement, but based on the rust looked like they had been there quite some time.

I saw another gentleman carefully combing the basement, he said he was a contractor so we were chatting about all the issues and how we wouldn't touch it with a 10 foot pole. We had both roughly estimated $250k in repairs throughout the property. Even if you bought it for list price and fixed it up, you would never be able to sell it for what you had into it.

I was incredibly surprised how many young couples came through the basement and didn't even look up. Didn't turn on their phone flashlight or actually look at anything. One agent tells her clients "I just sold another house with a dirt basement like this, you can pour a foundation." Uhh yeah, that's the least of your worries.

I saw the house go pending today. I really hope whoever bought it knew exactly what they were getting into, and that it wasn't one of those younger couples who waived inspection or something to be competitive out of FOMO.
How can it be bad if "Suzanne Researched This?"
https://www.youtube.com/watch?v=20n-cD8ERgs

I watched a ~$250K home with multiple active roof leaks (buckets on the floor) which caused a substantial kitchen fire get bid to $350K. That realtor was right when he said to not bother cleaning up after the fire department nor worry about the roof leaking.
flyfishers83
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Re: Tales from this insane real estate market

Post by flyfishers83 »

The market to buy rental properties has been silly around me with houses I wouldn't touch having multiple offers sight unseen. Just yesterday, my neighbor stopped by to let me know he's moving. Got an unsolicited offer for close to 50% more than he paid for his house like 15 months ago. The neighbor two house away also got an unsolicited offer for similar money. We don't want to move, but was told we could probably sell for 50% over what we paid 2 years ago. I keep being surprised, as I live in a town of 16,000 with the closest real airport 2 hours away. It's the biggest town in the area, but still a small town. Didn't expect these kinds of things to happen.
Donethat96
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Re: Tales from this insane real estate market

Post by Donethat96 »

I follow the Burlington Vt market pretty closely. I'm aware of a house that listed in 2016 for $650K. It sold a little under 2 years later for $608K. It hit the market again at $899K last week and was under contract in 3 days. Until the sale is finalized I won't be able to see what the actual sales price was but I wouldn't be surprised if it went for $1 million or more. Strange times.
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