House prices expected to drop?
- scorcher31
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House prices expected to drop?
Obviously I understand every market is different for housing. Unfortunately for us, We've lived below our means and had a relatively inexpensive home in an inexpensive town, so it has not appreciated much. We had always planned to get a new home in the next few years, never really cared about mortgage rates because I could pay it off pretty quick as long as it was reasonable.
Unfortunately housing prices have gone wild recently, far exceeding increase in prices in most other goods. I know initially there was as short supply due to decrease in timber and other goods which likely added to it. Is the thought the housing market will eventually come back down again, maybe if/when interest rate go up and timber and other supplies come back? Even if I end up having to pay an arm and a leg for a new home which is painful enough, I have no interest in all cash offers, waiving of traditional protections like inspections, or getting into bidding wars. None of these were common in our area until the past year or so.
Unfortunately housing prices have gone wild recently, far exceeding increase in prices in most other goods. I know initially there was as short supply due to decrease in timber and other goods which likely added to it. Is the thought the housing market will eventually come back down again, maybe if/when interest rate go up and timber and other supplies come back? Even if I end up having to pay an arm and a leg for a new home which is painful enough, I have no interest in all cash offers, waiving of traditional protections like inspections, or getting into bidding wars. None of these were common in our area until the past year or so.
Re: House prices expected to drop?
Is this a theoretical question? Or a personally actionable question about whether you want to sell your current home and buy a new one? If it is personally actionable question, consider selling your current home and renting
Re: House prices expected to drop?
Who knows what's going on with prices. I'm not sure if they will drop that much. I have a similar conundrum. Our house is OK, but we've always been in the market for one that checks most of our boxes. The problem is, that kind of house isn't on the market all that often, so we'd have to have our ducks in a row. Our market here is so competitive, there isn't time to get together the financing. I saw a beautiful house I loved, but it was gone in about an hour, before I could even get a hold of my husband to show it to him!
I know someone who sold their house last year before they bought a new one and they were priced out of the market (their house sold for around 360K last year, but an almost identical house sold for 410K a month ago)! They are renting now. We thought about selling and renting, but I don't want to rent with kids, pets, etc. My husband thinks we should just stay put and do a little traveling instead.
I know someone who sold their house last year before they bought a new one and they were priced out of the market (their house sold for around 360K last year, but an almost identical house sold for 410K a month ago)! They are renting now. We thought about selling and renting, but I don't want to rent with kids, pets, etc. My husband thinks we should just stay put and do a little traveling instead.
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Re: House prices expected to drop?
Staying put is often the best choice.
Re: House prices expected to drop?
We've owned our home for ~35 years. I have seen it's value stay flat for a decade, go up dramatically pre-financial crisis, plummet post-2008, and recently reach all time highs. All those changes in value have had zero impact on my life. I ignore it. IMO, personal real estate is NOT an investment, but if fills a need to provide housing for you and your family. If your current home fulfills your needs for housing, stay there. If not, then move if you can afford it. If you cannot afford it now but you need/want a larger home, save until you can afford it. Over the course of a lifetime (assuming you will stay in your home a long time) the initial home valuation doesn't matter all that much unless you stretch so far that you cannot save sufficiently for your retirement needs.scorcher31 wrote: ↑Sat Jun 26, 2021 6:50 am Obviously I understand every market is different for housing. Unfortunately for us, We've lived below our means and had a relatively inexpensive home in an inexpensive town, so it has not appreciated much. We had always planned to get a new home in the next few years, never really cared about mortgage rates because I could pay it off pretty quick as long as it was reasonable.
Unfortunately housing prices have gone wild recently, far exceeding increase in prices in most other goods. I know initially there was as short supply due to decrease in timber and other goods which likely added to it. Is the thought the housing market will eventually come back down again, maybe if/when interest rate go up and timber and other supplies come back? Even if I end up having to pay an arm and a leg for a new home which is painful enough, I have no interest in all cash offers, waiving of traditional protections like inspections, or getting into bidding wars. None of these were common in our area until the past year or so.
Wrench
Re: House prices expected to drop?
Home price is affected by macro factors most important being local employment. Prices can correct by 20% at any time. The question is will it correct from today's prices or will the price rise another 50% before correcting. Also homes even in the same subdivision, are not the same. They differ in lot, options, improvements, busyness or quietness and several other personal preferences. If a house you like is for sale, but you decide to wait for prices to correct, prices may rise before correction and same house may not be for sale later. Since no one has a crystal ball, if you can afford the home now and a house you like is for sale, buy.scorcher31 wrote: ↑Sat Jun 26, 2021 6:50 am Obviously I understand every market is different for housing. Unfortunately for us, We've lived below our means and had a relatively inexpensive home in an inexpensive town, so it has not appreciated much. We had always planned to get a new home in the next few years, never really cared about mortgage rates because I could pay it off pretty quick as long as it was reasonable.
Unfortunately housing prices have gone wild recently, far exceeding increase in prices in most other goods. I know initially there was as short supply due to decrease in timber and other goods which likely added to it. Is the thought the housing market will eventually come back down again, maybe if/when interest rate go up and timber and other supplies come back? Even if I end up having to pay an arm and a leg for a new home which is painful enough, I have no interest in all cash offers, waiving of traditional protections like inspections, or getting into bidding wars. None of these were common in our area until the past year or so.
AV111
- scorcher31
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Re: House prices expected to drop?
It's actionable as in do I keep waiting/try to wait it out as I have an Ok home vs. just begin actively searching/buy. I don't want to get stuck in a FOMO situation and regret it with this housing market.
- scorcher31
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Re: House prices expected to drop?
This is exactly our situation as well.winterfan wrote: ↑Sat Jun 26, 2021 7:15 am Who knows what's going on with prices. I'm not sure if they will drop that much. I have a similar conundrum. Our house is OK, but we've always been in the market for one that checks most of our boxes. The problem is, that kind of house isn't on the market all that often, so we'd have to have our ducks in a row. Our market here is so competitive, there isn't time to get together the financing. I saw a beautiful house I loved, but it was gone in about an hour, before I could even get a hold of my husband to show it to him!
I know someone who sold their house last year before they bought a new one and they were priced out of the market (their house sold for around 360K last year, but an almost identical house sold for 410K a month ago)! They are renting now. We thought about selling and renting, but I don't want to rent with kids, pets, etc. My husband thinks we should just stay put and do a little traveling instead.
Re: House prices expected to drop?
How about staying put and doing some investing instead of travel?
I have been a homeowner for 50 years and even though the trend is upward, house prices are very cyclical. It might not be possible to time the stock market, but I have had a lot of success in timing the housing market. Get your financial ducks in a row and while there may not come a time when there is blood running in the streets, there will be a time of unloved houses forced into selling in a down market.
Answering a question is easy -- asking the right question is the hard part.
Re: House prices expected to drop?
The question is even more complicated when you consider inflation since even if home prices stay steady if there is five or ten years of just moderate inflation the real(inflation adjusted) price may drop a lot.House prices expected to drop?
Re: House prices expected to drop?
Maybe. Maybe not.scorcher31 wrote: ↑Sat Jun 26, 2021 6:50 amIs the thought the housing market will eventually come back down again, maybe if/when interest rate go up and timber and other supplies come back?
As you have learned in your inexpensive locale, the real estate market is hyperlocal. Some locales will see prices go down. Many will not.
This isn't just my wallet. It's an organizer, a memory and an old friend.
Re: House prices expected to drop?
We don't really need to invest too much more, but most of our NW is in Roth and IRAs. Spouse may retire in 2-5 years, he isn't sure since he still likes his job. It's hard because our house is fine, it is just missing some features that I would love to have and would be cost prohibitive to add. Our house is paid off too, that's what makes it harder. A better house would be about 100-200K more than what we could sell this for. We bought when it was competitive too, so the pickings were slim at the time.CurlyDave wrote: ↑Sat Jun 26, 2021 8:22 amHow about staying put and doing some investing instead of travel?
I have been a homeowner for 50 years and even though the trend is upward, house prices are very cyclical. It might not be possible to time the stock market, but I have had a lot of success in timing the housing market. Get your financial ducks in a row and while there may not come a time when there is blood running in the streets, there will be a time of unloved houses forced into selling in a down market.
- scorcher31
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Re: House prices expected to drop?
Agree in that not wanting home to be an investment. We don't want multiple properties and don't do real estate. I'm comfortable with the 3 fund method of investments and that's it. I also don't want to touch any of that money as am trying to oversave for retirement. We are in a weird spot in that when we bought our home out of residency it was somewhere between a starter home and a forever home. It certainly meets our needs. Not going to complain about a 2100 square foot home without major issues in a safe/quiet area. With that said there are a bunch of things we would love, and we were getting ready to upgrade in the next couple of years but the rapid increase in prices have given be pause. 1. I don't want to raid my taxable brokerage for a cash offer. 2. I don't know if it is worth the increased price and tend to overthink purchases, and in this market you need to move fast which is annoying and feels impulsive.Wrench wrote: ↑Sat Jun 26, 2021 7:23 amWe've owned our home for ~35 years. I have seen it's value stay flat for a decade, go up dramatically pre-financial crisis, plummet post-2008, and recently reach all time highs. All those changes in value have had zero impact on my life. I ignore it. IMO, personal real estate is NOT an investment, but if fills a need to provide housing for you and your family. If your current home fulfills your needs for housing, stay there. If not, then move if you can afford it. If you cannot afford it now but you need/want a larger home, save until you can afford it. Over the course of a lifetime (assuming you will stay in your home a long time) the initial home valuation doesn't matter all that much unless you stretch so far that you cannot save sufficiently for your retirement needs.scorcher31 wrote: ↑Sat Jun 26, 2021 6:50 am Obviously I understand every market is different for housing. Unfortunately for us, We've lived below our means and had a relatively inexpensive home in an inexpensive town, so it has not appreciated much. We had always planned to get a new home in the next few years, never really cared about mortgage rates because I could pay it off pretty quick as long as it was reasonable.
Unfortunately housing prices have gone wild recently, far exceeding increase in prices in most other goods. I know initially there was as short supply due to decrease in timber and other goods which likely added to it. Is the thought the housing market will eventually come back down again, maybe if/when interest rate go up and timber and other supplies come back? Even if I end up having to pay an arm and a leg for a new home which is painful enough, I have no interest in all cash offers, waiving of traditional protections like inspections, or getting into bidding wars. None of these were common in our area until the past year or so.
Wrench
There are however a bunch of downsides to property as well. We are in a low-middle class area and noone really socializes or has similar aged children. The upside is contractors are more affordable in our area. The school district is quite bad (like a 2 or 3), but we could always pay for private school for about 12k a year so it isn't a huge deal. The yard is small and we were hoping for closer to half an acre. On the upside we are on sewer and water so don't need to worry about wells, septic or generators. We also could drive to parks if we wanted. The kitchen and bathrooms should probably be redone, all standard builder grade formica and what not, but all still functional. We have no deck and probably need a new roof. Would prefer probably another 1k square foot in the home, but definitely not more than that.
I guess in short I'm trying to brainstorm through what we want to do. Again I was relatively comfortable buying at prices a year or two ago (but didn't have the downpayment or net worth then I do now), but more hesitant with increased prices through my state I am currently seeing. I also will not waive inspect or cash offer, which is not normal for my area in the past. Maybe I just dump money into upgrading my current home and finish the basement for more space.
- scorcher31
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Re: House prices expected to drop?
winterfan wrote: ↑Sat Jun 26, 2021 9:19 amWe don't really need to invest too much more, but most of our NW is in Roth and IRAs. Spouse may retire in 2-5 years, he isn't sure since he still likes his job. It's hard because our house is fine, it is just missing some features that I would love to have and would be cost prohibitive to add. Our house is paid off too, that's what makes it harder. A better house would be about 100-200K more than what we could sell this for. We bought when it was competitive too, so the pickings were slim at the time.CurlyDave wrote: ↑Sat Jun 26, 2021 8:22 amHow about staying put and doing some investing instead of travel?
I have been a homeowner for 50 years and even though the trend is upward, house prices are very cyclical. It might not be possible to time the stock market, but I have had a lot of success in timing the housing market. Get your financial ducks in a row and while there may not come a time when there is blood running in the streets, there will be a time of unloved houses forced into selling in a down market.
We are a bit younger than you guys and have a taxable account, but I won't touch it as i consider it for retirement as well. I can upgrade the house as well but no idea of the costs associated. Our home is paid off as well. For us we bought our home for 320k now its maybe worth 400k. The homes I was looking at were initially around 600k now they seem to be 900k.+ I didn't mind spending 200-300k more than our homes value but wasn't prepared to spend 500-600k more initially.
- RickBoglehead
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Re: House prices expected to drop?
The large increases in asking prices for homes in the past few months are outside the norm, driven by a host of factors. It is very reasonable to assume that these increases will not hold, and after the surge in demand from the pandemic, prices will drop back to a normal level. Yes, interest rates may go up, but even if they go up the drop in prices will more than make up for that.
We're in the market for a retirement home, but we're not paying 30 - 40% over last year's prices. We MAY choose to sell our current home and rent while we wait.
We're in the market for a retirement home, but we're not paying 30 - 40% over last year's prices. We MAY choose to sell our current home and rent while we wait.
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Re: House prices expected to drop?
FWIW we have been thinking about downsizing, and moving from the Seattle area to a smaller Washington city. We have been actively looking, talking to agents, etc., but came to the conclusion that the market is just too crazy--both in price and competitiveness. I do expect prices to soften ("drop" is probably too strong a word), especially in secondary markets. And I do expect some jobs will continue allow some remote work, but I don't buy in to the idea that full-time remote is here to stay on a large scale. And so all those remote homes bought in the last year will likely be coming on the market (along with a lot of RVs). We expect the Seattle market to soften a bit, but generally remain strong. So we plan to revisit selling in a year or so.
Like I said, FWIW.
Like I said, FWIW.
- scorcher31
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Re: House prices expected to drop?
This is my thought as well, and was looking to see if anyone else here thought the same. Increasing interest rates don't bother me as if prices drop then I would barely need a mortgage. We have a young one so we aren't going to sell this home until we buy a new one. I'm fine losing the 80k gained on this one if the more expensive ones drop in price as well.RickBoglehead wrote: ↑Sat Jun 26, 2021 9:28 am The large increases in asking prices for homes in the past few months are outside the norm, driven by a host of factors. It is very reasonable to assume that these increases will not hold, and after the surge in demand from the pandemic, prices will drop back to a normal level. Yes, interest rates may go up, but even if they go up the drop in prices will more than make up for that.
We're in the market for a retirement home, but we're not paying 30 - 40% over last year's prices. We MAY choose to sell our current home and rent while we wait.
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Re: House prices expected to drop?
Almost sounds like an episode of Love it or List it?scorcher31 wrote: ↑Sat Jun 26, 2021 9:21 amAgree in that not wanting home to be an investment. We don't want multiple properties and don't do real estate. I'm comfortable with the 3 fund method of investments and that's it. I also don't want to touch any of that money as am trying to oversave for retirement. We are in a weird spot in that when we bought our home out of residency it was somewhere between a starter home and a forever home. It certainly meets our needs. Not going to complain about a 2100 square foot home without major issues in a safe/quiet area. With that said there are a bunch of things we would love, and we were getting ready to upgrade in the next couple of years but the rapid increase in prices have given be pause. 1. I don't want to raid my taxable brokerage for a cash offer. 2. I don't know if it is worth the increased price and tend to overthink purchases, and in this market you need to move fast which is annoying and feels impulsive.Wrench wrote: ↑Sat Jun 26, 2021 7:23 amWe've owned our home for ~35 years. I have seen it's value stay flat for a decade, go up dramatically pre-financial crisis, plummet post-2008, and recently reach all time highs. All those changes in value have had zero impact on my life. I ignore it. IMO, personal real estate is NOT an investment, but if fills a need to provide housing for you and your family. If your current home fulfills your needs for housing, stay there. If not, then move if you can afford it. If you cannot afford it now but you need/want a larger home, save until you can afford it. Over the course of a lifetime (assuming you will stay in your home a long time) the initial home valuation doesn't matter all that much unless you stretch so far that you cannot save sufficiently for your retirement needs.scorcher31 wrote: ↑Sat Jun 26, 2021 6:50 am Obviously I understand every market is different for housing. Unfortunately for us, We've lived below our means and had a relatively inexpensive home in an inexpensive town, so it has not appreciated much. We had always planned to get a new home in the next few years, never really cared about mortgage rates because I could pay it off pretty quick as long as it was reasonable.
Unfortunately housing prices have gone wild recently, far exceeding increase in prices in most other goods. I know initially there was as short supply due to decrease in timber and other goods which likely added to it. Is the thought the housing market will eventually come back down again, maybe if/when interest rate go up and timber and other supplies come back? Even if I end up having to pay an arm and a leg for a new home which is painful enough, I have no interest in all cash offers, waiving of traditional protections like inspections, or getting into bidding wars. None of these were common in our area until the past year or so.
Wrench
There are however a bunch of downsides to property as well. We are in a low-middle class area and noone really socializes or has similar aged children. The upside is contractors are more affordable in our area. The school district is quite bad (like a 2 or 3), but we could always pay for private school for about 12k a year so it isn't a huge deal. The yard is small and we were hoping for closer to half an acre. On the upside we are on sewer and water so don't need to worry about wells, septic or generators. We also could drive to parks if we wanted. The kitchen and bathrooms should probably be redone, all standard builder grade formica and what not, but all still functional. We have no deck and probably need a new roof. Would prefer probably another 1k square foot in the home, but definitely not more than that.
I guess in short I'm trying to brainstorm through what we want to do. Again I was relatively comfortable buying at prices a year or two ago (but didn't have the downpayment or net worth then I do now), but more hesitant with increased prices through my state I am currently seeing. I also will not waive inspect or cash offer, which is not normal for my area in the past. Maybe I just dump money into upgrading my current home and finish the basement for more space.
We were in a similar situation around 2000. We significantly upgraded that house, stayed 5 more years including two with two in private school and moved. If we had not upgraded, we would have left sooner.
Once we started paying private school tuition, we started looking at what we could get in the really good school districts for that extra 16,000 per year ($8,000x2). And for us private elementary costs were much lower than private high school, so we were looking at 16k to 40k per year for 12 years. The math of moving was a no-brainer. We also felt we were going to be making a choice between paying for 12 years of private school versus college.
Depending upon how little your little one is, I’d give it a few years and then decide. And try not to go nuts on the upgrades to the current place until you decide.
I don’t think prices will come down but I think the cash offers and missing contingencies will cool down.
- scorcher31
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Re: House prices expected to drop?
I agree and probably won't upgrade anything yet except replace the roof at some point. I think If cash offers and missing contingencies cooled down at least I would have more interest, preferably with more homes on the market. So because we only have 1 child the cost of private school wouldn't be too bad. It would cost about 12k per year for 12 years or 144k, put I currently pay about 18k/year for daycare. By moving I would save maybe 144k in private school, but to get a similar/nonupgraded version of our home in a good school district would take us from our 320k home to about a 600k-ish home. Keep in mind we are looking for an upgraded home so probably 800-900k in end. I think if we had 2 children it would be much more clear cut financially to move based on schooling alone, but that's not in the plan. We also at least have 2-3 years before school, and could also consider giving the public school a shot in the beginning.lazynovice wrote: ↑Sat Jun 26, 2021 11:35 amAlmost sounds like an episode of Love it or List it?scorcher31 wrote: ↑Sat Jun 26, 2021 9:21 amAgree in that not wanting home to be an investment. We don't want multiple properties and don't do real estate. I'm comfortable with the 3 fund method of investments and that's it. I also don't want to touch any of that money as am trying to oversave for retirement. We are in a weird spot in that when we bought our home out of residency it was somewhere between a starter home and a forever home. It certainly meets our needs. Not going to complain about a 2100 square foot home without major issues in a safe/quiet area. With that said there are a bunch of things we would love, and we were getting ready to upgrade in the next couple of years but the rapid increase in prices have given be pause. 1. I don't want to raid my taxable brokerage for a cash offer. 2. I don't know if it is worth the increased price and tend to overthink purchases, and in this market you need to move fast which is annoying and feels impulsive.Wrench wrote: ↑Sat Jun 26, 2021 7:23 amWe've owned our home for ~35 years. I have seen it's value stay flat for a decade, go up dramatically pre-financial crisis, plummet post-2008, and recently reach all time highs. All those changes in value have had zero impact on my life. I ignore it. IMO, personal real estate is NOT an investment, but if fills a need to provide housing for you and your family. If your current home fulfills your needs for housing, stay there. If not, then move if you can afford it. If you cannot afford it now but you need/want a larger home, save until you can afford it. Over the course of a lifetime (assuming you will stay in your home a long time) the initial home valuation doesn't matter all that much unless you stretch so far that you cannot save sufficiently for your retirement needs.scorcher31 wrote: ↑Sat Jun 26, 2021 6:50 am Obviously I understand every market is different for housing. Unfortunately for us, We've lived below our means and had a relatively inexpensive home in an inexpensive town, so it has not appreciated much. We had always planned to get a new home in the next few years, never really cared about mortgage rates because I could pay it off pretty quick as long as it was reasonable.
Unfortunately housing prices have gone wild recently, far exceeding increase in prices in most other goods. I know initially there was as short supply due to decrease in timber and other goods which likely added to it. Is the thought the housing market will eventually come back down again, maybe if/when interest rate go up and timber and other supplies come back? Even if I end up having to pay an arm and a leg for a new home which is painful enough, I have no interest in all cash offers, waiving of traditional protections like inspections, or getting into bidding wars. None of these were common in our area until the past year or so.
Wrench
There are however a bunch of downsides to property as well. We are in a low-middle class area and noone really socializes or has similar aged children. The upside is contractors are more affordable in our area. The school district is quite bad (like a 2 or 3), but we could always pay for private school for about 12k a year so it isn't a huge deal. The yard is small and we were hoping for closer to half an acre. On the upside we are on sewer and water so don't need to worry about wells, septic or generators. We also could drive to parks if we wanted. The kitchen and bathrooms should probably be redone, all standard builder grade formica and what not, but all still functional. We have no deck and probably need a new roof. Would prefer probably another 1k square foot in the home, but definitely not more than that.
I guess in short I'm trying to brainstorm through what we want to do. Again I was relatively comfortable buying at prices a year or two ago (but didn't have the downpayment or net worth then I do now), but more hesitant with increased prices through my state I am currently seeing. I also will not waive inspect or cash offer, which is not normal for my area in the past. Maybe I just dump money into upgrading my current home and finish the basement for more space.
We were in a similar situation around 2000. We significantly upgraded that house, stayed 5 more years including two with two in private school and moved. If we had not upgraded, we would have left sooner.
Once we started paying private school tuition, we started looking at what we could get in the really good school districts for that extra 16,000 per year ($8,000x2). And for us private elementary costs were much lower than private high school, so we were looking at 16k to 40k per year for 12 years. The math of moving was a no-brainer. We also felt we were going to be making a choice between paying for 12 years of private school versus college.
Depending upon how little your little one is, I’d give it a few years and then decide. And try not to go nuts on the upgrades to the current place until you decide.
I don’t think prices will come down but I think the cash offers and missing contingencies will cool down.
Yes totally a plus/minus episode of pesudo love it or list it here, but have analysis paralysis to some reason. That's why I'm talking it through here.
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Re: House prices expected to drop?
A house is a lifestyle. We all determine what lifestyle we want and what we are willing to sacrifice to get the lifestyle. It sounds like from your posts that you want the upgraded lifestyle and can afford the $900k but you are worried about a decline in prices in the future. As long as you can afford the $900k home without raiding your taxable or retirement savings and can continue to save then there is no reason not to buy the lifestyle you want. You will never be able to perfectly time the market and in 10 years any market decline will mostly be irrelevant. You even said your realize a house is not an investment, so why are you try to treat it as an investment?
Re: House prices expected to drop?
It seems to me that for existing homeowners looking for their next house, gyrations in the market are not very meaningful unless you believe there will be a very weak correlation in the price changes of your current and future house, or there is a huge inherent price difference.
It doesn't really make sense to "wait it out" unless you're willing to sell now and rent for a while.
It doesn't really make sense to "wait it out" unless you're willing to sell now and rent for a while.
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Re: House prices expected to drop?
I may have mispoke. I was ok buying in when the homes were 600 to maybe a max of 700k. I can buy now, but not sure if I want to for for 900k to 1 million. I'm not concerned that the prices will drop... I want them to. I'm not happy with the "sticker price".Golf maniac wrote: ↑Sat Jun 26, 2021 12:02 pm A house is a lifestyle. We all determine what lifestyle we want and what we are willing to sacrifice to get the lifestyle. It sounds like from your posts that you want the upgraded lifestyle and can afford the $900k but you are worried about a decline in prices in the future. As long as you can afford the $900k home without raiding your taxable or retirement savings and can continue to save then there is no reason not to buy the lifestyle you want. You will never be able to perfectly time the market and in 10 years any market decline will mostly be irrelevant. You even said your realize a house is not an investment, so why are you try to treat it as an investment?
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Re: House prices expected to drop?
Definitely not willing to sell now and rent. The new home would probably be 2 to 3x the price of our current paid of home. It's also not needed more of an aspiration. Besides our retirement and brokerage I'm saving about 5k-6k a month for a new home in a high yield savings. I'd rather pretty much plop it all down and then use the sale of my old home to pay off the majority of the mortgage after moving in. I can get darn close to that with a 600k home which is where the prices were a couple of years ago. Won't be nearly that effective with a 900k home and then I'll have a mortgage all over again.vfinx wrote: ↑Sat Jun 26, 2021 12:03 pm It seems to me that for existing homeowners looking for their next house, gyrations in the market are not very meaningful unless you believe there will be a very weak correlation in the price changes of your current and future house, or there is a huge inherent price difference.
It doesn't really make sense to "wait it out" unless you're willing to sell now and rent for a while.
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Re: House prices expected to drop?
I can understand thinking prices will go back to late 2019 levels (while disagreeing). By a “couple of years ago” when do you mean?scorcher31 wrote: ↑Sat Jun 26, 2021 12:18 pmDefinitely not willing to sell now and rent. The new home would probably be 2 to 3x the price of our current paid of home. It's also not needed more of an aspiration. Besides our retirement and brokerage I'm saving about 5k-6k a month for a new home in a high yield savings. I'd rather pretty much plop it all down and then use the sale of my old home to pay off the majority of the mortgage after moving in. I can get darn close to that with a 600k home which is where the prices were a couple of years ago. Won't be nearly that effective with a 900k home and then I'll have a mortgage all over again.vfinx wrote: ↑Sat Jun 26, 2021 12:03 pm It seems to me that for existing homeowners looking for their next house, gyrations in the market are not very meaningful unless you believe there will be a very weak correlation in the price changes of your current and future house, or there is a huge inherent price difference.
It doesn't really make sense to "wait it out" unless you're willing to sell now and rent for a while.
Re: House prices expected to drop?
I have considered timing the market by selling my house and renting for a few years but quickly dismissed it. Problem is, the rental market here is almost as insane as the sales market. I'm starting to hear anecdotal stories of bidding wars on rental rates for single family detached houses in some neighborhoods. Plus, the mom-and-pop landlord is starting to become a minority compared to the big private equity rental companies like First Key and Invitation Homes. I've heard these companies are a nightmare to deal with and are death by a hundred fees.
I might consider selling my house to a PE firm under the condition that I could live in it rent free for a year after closing.
I might consider selling my house to a PE firm under the condition that I could live in it rent free for a year after closing.
Re: House prices expected to drop?
Well it would seem prices have to come down but who knows.scorcher31 wrote: ↑Sat Jun 26, 2021 6:50 am Obviously I understand every market is different for housing. Unfortunately for us, We've lived below our means and had a relatively inexpensive home in an inexpensive town, so it has not appreciated much. We had always planned to get a new home in the next few years, never really cared about mortgage rates because I could pay it off pretty quick as long as it was reasonable.
Unfortunately housing prices have gone wild recently, far exceeding increase in prices in most other goods. I know initially there was as short supply due to decrease in timber and other goods which likely added to it. Is the thought the housing market will eventually come back down again, maybe if/when interest rate go up and timber and other supplies come back? Even if I end up having to pay an arm and a leg for a new home which is painful enough, I have no interest in all cash offers, waiving of traditional protections like inspections, or getting into bidding wars. None of these were common in our area until the past year or so.
In my little 186 townhome community which is made up of duets, 2 houses attached to each other, a 1735 sq ft two story on a less than 5000 sq ft lot just sold for 1,235,000. We live about 45 minutes from Silicon Valley and SF. Pretty insane.
A great time to sell if you want to move out of state.
K.I.S.S........so easy to say so difficult to do.
- scorcher31
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Re: House prices expected to drop?
Late 2019 pre covid is what I am looking for. I feel like in NJ and across the boarder in PA properties have gone up by 1/3 since that time. I'm ok with the disagreements, just wanted to get peoples thoughts as to whether it is likely or unlikely. In the very least I would hope the cash offers would stop, the contingencies waivers would stop and supply of homes would increase. The two former were not common in my area.lazynovice wrote: ↑Sat Jun 26, 2021 12:22 pmI can understand thinking prices will go back to late 2019 levels (while disagreeing). By a “couple of years ago” when do you mean?scorcher31 wrote: ↑Sat Jun 26, 2021 12:18 pmDefinitely not willing to sell now and rent. The new home would probably be 2 to 3x the price of our current paid of home. It's also not needed more of an aspiration. Besides our retirement and brokerage I'm saving about 5k-6k a month for a new home in a high yield savings. I'd rather pretty much plop it all down and then use the sale of my old home to pay off the majority of the mortgage after moving in. I can get darn close to that with a 600k home which is where the prices were a couple of years ago. Won't be nearly that effective with a 900k home and then I'll have a mortgage all over again.vfinx wrote: ↑Sat Jun 26, 2021 12:03 pm It seems to me that for existing homeowners looking for their next house, gyrations in the market are not very meaningful unless you believe there will be a very weak correlation in the price changes of your current and future house, or there is a huge inherent price difference.
It doesn't really make sense to "wait it out" unless you're willing to sell now and rent for a while.
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Re: House prices expected to drop?
My hackish explanation is that this is a supply-side issue. People are staying put and are not putting their houses up for sale. People are moving to cheaper areas to look at cows or wherever they really want to live because remote work is being offered to more people now. But there was never much supply in such places and there still isn't.
On the demand side, some trends there too. Mortgage rates are anomalously low due to ongoing manipulation of credit markets by the Federal Reserve. When money is basically free, it doesn't seem quite so crazy to borrow a lot of it. Couples are getting sick of each other and separating, creating more households. And judging from what I have seen at poker tables lately, not everyone who got stimulus money used it to meet current needs or to invest in a sensible way.
As these things begin to change (assuming they do) it will impact prices.
On the demand side, some trends there too. Mortgage rates are anomalously low due to ongoing manipulation of credit markets by the Federal Reserve. When money is basically free, it doesn't seem quite so crazy to borrow a lot of it. Couples are getting sick of each other and separating, creating more households. And judging from what I have seen at poker tables lately, not everyone who got stimulus money used it to meet current needs or to invest in a sensible way.
As these things begin to change (assuming they do) it will impact prices.
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Re: House prices expected to drop?
I am thinking this is the new bottom for housing.scorcher31 wrote: ↑Sat Jun 26, 2021 6:50 am Obviously I understand every market is different for housing. Unfortunately for us, We've lived below our means and had a relatively inexpensive home in an inexpensive town, so it has not appreciated much. We had always planned to get a new home in the next few years, never really cared about mortgage rates because I could pay it off pretty quick as long as it was reasonable.
Unfortunately housing prices have gone wild recently, far exceeding increase in prices in most other goods. I know initially there was as short supply due to decrease in timber and other goods which likely added to it. Is the thought the housing market will eventually come back down again, maybe if/when interest rate go up and timber and other supplies come back? Even if I end up having to pay an arm and a leg for a new home which is painful enough, I have no interest in all cash offers, waiving of traditional protections like inspections, or getting into bidding wars. None of these were common in our area until the past year or so.
Re: House prices expected to drop?
Delete
Last edited by hoops777 on Sat Jun 26, 2021 12:57 pm, edited 1 time in total.
K.I.S.S........so easy to say so difficult to do.
- scorcher31
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Re: House prices expected to drop?
Shouldn't supply increase when foreclosures start happening again, and building and lumbar kicks back into full gear? Just curious as to the thought process.Somethingwitty92912 wrote: ↑Sat Jun 26, 2021 12:43 pmI am thinking this is the new bottom for housing.scorcher31 wrote: ↑Sat Jun 26, 2021 6:50 am Obviously I understand every market is different for housing. Unfortunately for us, We've lived below our means and had a relatively inexpensive home in an inexpensive town, so it has not appreciated much. We had always planned to get a new home in the next few years, never really cared about mortgage rates because I could pay it off pretty quick as long as it was reasonable.
Unfortunately housing prices have gone wild recently, far exceeding increase in prices in most other goods. I know initially there was as short supply due to decrease in timber and other goods which likely added to it. Is the thought the housing market will eventually come back down again, maybe if/when interest rate go up and timber and other supplies come back? Even if I end up having to pay an arm and a leg for a new home which is painful enough, I have no interest in all cash offers, waiving of traditional protections like inspections, or getting into bidding wars. None of these were common in our area until the past year or so.
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Re: House prices expected to drop?
In your original post, you say that you have no interest in all cash offers. If people making all cash offers are the ones winning the bids on houses, who will foreclose on them?scorcher31 wrote: ↑Sat Jun 26, 2021 12:57 pmShouldn't supply increase when foreclosures start happening again, and building and lumbar kicks back into full gear?Somethingwitty92912 wrote: ↑Sat Jun 26, 2021 12:43 pmI am thinking this is the new bottom for housing.scorcher31 wrote: ↑Sat Jun 26, 2021 6:50 am Obviously I understand every market is different for housing. Unfortunately for us, We've lived below our means and had a relatively inexpensive home in an inexpensive town, so it has not appreciated much. We had always planned to get a new home in the next few years, never really cared about mortgage rates because I could pay it off pretty quick as long as it was reasonable.
Unfortunately housing prices have gone wild recently, far exceeding increase in prices in most other goods. I know initially there was as short supply due to decrease in timber and other goods which likely added to it. Is the thought the housing market will eventually come back down again, maybe if/when interest rate go up and timber and other supplies come back? Even if I end up having to pay an arm and a leg for a new home which is painful enough, I have no interest in all cash offers, waiving of traditional protections like inspections, or getting into bidding wars. None of these were common in our area until the past year or so.
- scorcher31
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Re: House prices expected to drop?
All foreclosures were stopped during the pandemic i believe. I'm assuming a lot of those people will lose their homes when evictions start back up shortlyRon Ronnerson wrote: ↑Sat Jun 26, 2021 1:07 pmIn your original post, you say that you have no interest in all cash offers. If people making all cash offers are the ones winning the bids on houses, who will foreclose on them?scorcher31 wrote: ↑Sat Jun 26, 2021 12:57 pmShouldn't supply increase when foreclosures start happening again, and building and lumbar kicks back into full gear?Somethingwitty92912 wrote: ↑Sat Jun 26, 2021 12:43 pmI am thinking this is the new bottom for housing.scorcher31 wrote: ↑Sat Jun 26, 2021 6:50 am Obviously I understand every market is different for housing. Unfortunately for us, We've lived below our means and had a relatively inexpensive home in an inexpensive town, so it has not appreciated much. We had always planned to get a new home in the next few years, never really cared about mortgage rates because I could pay it off pretty quick as long as it was reasonable.
Unfortunately housing prices have gone wild recently, far exceeding increase in prices in most other goods. I know initially there was as short supply due to decrease in timber and other goods which likely added to it. Is the thought the housing market will eventually come back down again, maybe if/when interest rate go up and timber and other supplies come back? Even if I end up having to pay an arm and a leg for a new home which is painful enough, I have no interest in all cash offers, waiving of traditional protections like inspections, or getting into bidding wars. None of these were common in our area until the past year or so.
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Re: House prices expected to drop?
https://www.whitehouse.gov/briefing-roo ... eclosures/scorcher31 wrote: ↑Sat Jun 26, 2021 1:10 pmAll foreclosures were stopped during the pandemic i believe. I'm assuming a lot of those people will lose their homes when evictions start back up shortlyRon Ronnerson wrote: ↑Sat Jun 26, 2021 1:07 pmIn your original post, you say that you have no interest in all cash offers. If people making all cash offers are the ones winning the bids on houses, who will foreclose on them?scorcher31 wrote: ↑Sat Jun 26, 2021 12:57 pmShouldn't supply increase when foreclosures start happening again, and building and lumbar kicks back into full gear?Somethingwitty92912 wrote: ↑Sat Jun 26, 2021 12:43 pmI am thinking this is the new bottom for housing.scorcher31 wrote: ↑Sat Jun 26, 2021 6:50 am Obviously I understand every market is different for housing. Unfortunately for us, We've lived below our means and had a relatively inexpensive home in an inexpensive town, so it has not appreciated much. We had always planned to get a new home in the next few years, never really cared about mortgage rates because I could pay it off pretty quick as long as it was reasonable.
Unfortunately housing prices have gone wild recently, far exceeding increase in prices in most other goods. I know initially there was as short supply due to decrease in timber and other goods which likely added to it. Is the thought the housing market will eventually come back down again, maybe if/when interest rate go up and timber and other supplies come back? Even if I end up having to pay an arm and a leg for a new home which is painful enough, I have no interest in all cash offers, waiving of traditional protections like inspections, or getting into bidding wars. None of these were common in our area until the past year or so.
Once the moratoria end, HUD, VA, and USDA will take additional steps to prevent foreclosures on mortgages backed by those agencies until borrowers are reviewed for COVID-19 streamlined loss mitigation options that are affordable, while FHFA will continue to work with Fannie Mae and Freddie Mac to ensure that borrowers are evaluated for home retention solutions prior to any referral to foreclosure.
In addition, HUD, VA, and USDA will also continue to allow homeowners who have not taken advantage of forbearance to date to enter into COVID-related forbearance through September 30, 2021, while homeowners with Fannie Mae or Freddie Mac-backed mortgages who have COVID-related hardships will also continue to be eligible for COVID-related forbearance. Finally, HUD, VA, and USDA will be announcing additional steps in July to offer borrowers payment reduction options that will enable more homeowners to stay in their homes.
- scorcher31
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Re: House prices expected to drop?
Oh wow, was not aware they were going to keep doing this kind of assistance.lazynovice wrote: ↑Sat Jun 26, 2021 1:15 pmhttps://www.whitehouse.gov/briefing-roo ... eclosures/scorcher31 wrote: ↑Sat Jun 26, 2021 1:10 pmAll foreclosures were stopped during the pandemic i believe. I'm assuming a lot of those people will lose their homes when evictions start back up shortlyRon Ronnerson wrote: ↑Sat Jun 26, 2021 1:07 pmIn your original post, you say that you have no interest in all cash offers. If people making all cash offers are the ones winning the bids on houses, who will foreclose on them?scorcher31 wrote: ↑Sat Jun 26, 2021 12:57 pmShouldn't supply increase when foreclosures start happening again, and building and lumbar kicks back into full gear?Somethingwitty92912 wrote: ↑Sat Jun 26, 2021 12:43 pm
I am thinking this is the new bottom for housing.
Once the moratoria end, HUD, VA, and USDA will take additional steps to prevent foreclosures on mortgages backed by those agencies until borrowers are reviewed for COVID-19 streamlined loss mitigation options that are affordable, while FHFA will continue to work with Fannie Mae and Freddie Mac to ensure that borrowers are evaluated for home retention solutions prior to any referral to foreclosure.
In addition, HUD, VA, and USDA will also continue to allow homeowners who have not taken advantage of forbearance to date to enter into COVID-related forbearance through September 30, 2021, while homeowners with Fannie Mae or Freddie Mac-backed mortgages who have COVID-related hardships will also continue to be eligible for COVID-related forbearance. Finally, HUD, VA, and USDA will be announcing additional steps in July to offer borrowers payment reduction options that will enable more homeowners to stay in their homes.
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- Location: Denver area. Former Texan.
Re: House prices expected to drop?
Have you said where you live? In my area, people who buy 900k houses have not lost jobs and gone into forbearance. Plus the enhanced child credit is starting to hit people’s bank accounts in July. All this rescue plan money is intended to provide a soft landing for those hard hit, but a lot of people were not hit very hard- like you and me.scorcher31 wrote: ↑Sat Jun 26, 2021 1:19 pmOh wow, was not aware they were going to keep doing this kind of assistance.lazynovice wrote: ↑Sat Jun 26, 2021 1:15 pmhttps://www.whitehouse.gov/briefing-roo ... eclosures/scorcher31 wrote: ↑Sat Jun 26, 2021 1:10 pmAll foreclosures were stopped during the pandemic i believe. I'm assuming a lot of those people will lose their homes when evictions start back up shortlyRon Ronnerson wrote: ↑Sat Jun 26, 2021 1:07 pmIn your original post, you say that you have no interest in all cash offers. If people making all cash offers are the ones winning the bids on houses, who will foreclose on them?scorcher31 wrote: ↑Sat Jun 26, 2021 12:57 pm
Shouldn't supply increase when foreclosures start happening again, and building and lumbar kicks back into full gear?
Once the moratoria end, HUD, VA, and USDA will take additional steps to prevent foreclosures on mortgages backed by those agencies until borrowers are reviewed for COVID-19 streamlined loss mitigation options that are affordable, while FHFA will continue to work with Fannie Mae and Freddie Mac to ensure that borrowers are evaluated for home retention solutions prior to any referral to foreclosure.
In addition, HUD, VA, and USDA will also continue to allow homeowners who have not taken advantage of forbearance to date to enter into COVID-related forbearance through September 30, 2021, while homeowners with Fannie Mae or Freddie Mac-backed mortgages who have COVID-related hardships will also continue to be eligible for COVID-related forbearance. Finally, HUD, VA, and USDA will be announcing additional steps in July to offer borrowers payment reduction options that will enable more homeowners to stay in their homes.
Re: House prices expected to drop?
A few thoughts on the housing market, as I’ve recently bought and sold in the last 6 weeks:
- Listen to the Animal Spirits pod cast on this topic, the fellow they have on makes a very compelling case why waiting is a very bad idea. Essentially, houses are not stocks and none of the factors in 2008 are in play here.
- Look for properties which are pre-inspected, for both pests and general inspection. When I sold my home folks waived contingencies because they already had access to this information (as I had the inspections already done), it’s unlikely they would have otherwise.
- Buy what you can afford now — maybe even a bit of a stretch. Don’t try for perfection here, if prices do drop in the future you can always upgrade. I’ve bought 4 homes in my life, never have prices dropped below what I paid between these purchases — including 2008 (they never fell far enough to touch what I paid for my first home).
- 2008 was a very rare event, pretend it never happened. Plan for the average case not the uncommon case. 2008 was like being up against somebody with quad aces, and hitting a royal flush on the river. Sure it’s nice when it happens, but you don’t play poker expecting that royal flush on the river (with quad aces being represented), or you will lose nearly all the time.
- Inflation is a real risk right now, you can’t pump 4-5T and more coming, and not have any consequences. Housing prices are starting to reflect this. I think if you choose to wait, you could get yourself into a terrible corner, as prices may only rise and you will wait, and wait … and wait to justify your original decision and end up costing yourself even more money. It’s a bit like those who sold in February last year, failing to time the buy-in and then seeing the market sky rocket past where they sold. This is a horrible mind job, to be in, and one you should avoid here.
In summary, the better risk to take here given the variables at play is to buy what you can afford. If prices do drop, consider upgrading. You might lose some on your home but the other guy will have lost a ton more, which you will benefit from. If prices don’t drop — the more likely scenario IMO, you are in the game and you don’t get priced out.
This is one of those situations where your don’t want to let perfect be the enemy of the good.
- Listen to the Animal Spirits pod cast on this topic, the fellow they have on makes a very compelling case why waiting is a very bad idea. Essentially, houses are not stocks and none of the factors in 2008 are in play here.
- Look for properties which are pre-inspected, for both pests and general inspection. When I sold my home folks waived contingencies because they already had access to this information (as I had the inspections already done), it’s unlikely they would have otherwise.
- Buy what you can afford now — maybe even a bit of a stretch. Don’t try for perfection here, if prices do drop in the future you can always upgrade. I’ve bought 4 homes in my life, never have prices dropped below what I paid between these purchases — including 2008 (they never fell far enough to touch what I paid for my first home).
- 2008 was a very rare event, pretend it never happened. Plan for the average case not the uncommon case. 2008 was like being up against somebody with quad aces, and hitting a royal flush on the river. Sure it’s nice when it happens, but you don’t play poker expecting that royal flush on the river (with quad aces being represented), or you will lose nearly all the time.
- Inflation is a real risk right now, you can’t pump 4-5T and more coming, and not have any consequences. Housing prices are starting to reflect this. I think if you choose to wait, you could get yourself into a terrible corner, as prices may only rise and you will wait, and wait … and wait to justify your original decision and end up costing yourself even more money. It’s a bit like those who sold in February last year, failing to time the buy-in and then seeing the market sky rocket past where they sold. This is a horrible mind job, to be in, and one you should avoid here.
In summary, the better risk to take here given the variables at play is to buy what you can afford. If prices do drop, consider upgrading. You might lose some on your home but the other guy will have lost a ton more, which you will benefit from. If prices don’t drop — the more likely scenario IMO, you are in the game and you don’t get priced out.
This is one of those situations where your don’t want to let perfect be the enemy of the good.
Last edited by mrspock on Sat Jun 26, 2021 1:38 pm, edited 2 times in total.
Re: House prices expected to drop?
scorcher31,scorcher31 wrote: ↑Sat Jun 26, 2021 8:12 amIt's actionable as in do I keep waiting/try to wait it out as I have an Ok home vs. just begin actively searching/buy. I don't want to get stuck in a FOMO situation and regret it with this housing market.
Housing is local.
I do not understand why you need to ask this question. As long as your area is old enough and has houses older than 20 to 30 years, you could check the price per square feet trend for the last 20 to 30 years. Hence, you could know whether the house price is at a peak, bottom, or in between.
For example, in my area, the median price between the peak and bottom is around $200 per square feet. If and when the price drop below $200 per square feet, it may be a good time to buy.
KlangFool
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- scorcher31
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Re: House prices expected to drop?
Live in NJ. I know pre pandemic there were frequent foreclosures and short sales in my area but again our homes were in the 300k range. The homes I would have been looking at pre pandemic were 600kish. Never really paid attention if there where short sales and what not in those ranges. Assumed to be honest people just way over spent and then couldn't pay it off, at least it seemed that way around here Figured it would be true at the higher range as well.lazynovice wrote: ↑Sat Jun 26, 2021 1:26 pmHave you said where you live? In my area, people who buy 900k houses have not lost jobs and gone into forbearance. Plus the enhanced child credit is starting to hit people’s bank accounts in July. All this rescue plan money is intended to provide a soft landing for those hard hit, but a lot of people were not hit very hard- like you and me.scorcher31 wrote: ↑Sat Jun 26, 2021 1:19 pmOh wow, was not aware they were going to keep doing this kind of assistance.lazynovice wrote: ↑Sat Jun 26, 2021 1:15 pmhttps://www.whitehouse.gov/briefing-roo ... eclosures/scorcher31 wrote: ↑Sat Jun 26, 2021 1:10 pmAll foreclosures were stopped during the pandemic i believe. I'm assuming a lot of those people will lose their homes when evictions start back up shortlyRon Ronnerson wrote: ↑Sat Jun 26, 2021 1:07 pm
In your original post, you say that you have no interest in all cash offers. If people making all cash offers are the ones winning the bids on houses, who will foreclose on them?
Once the moratoria end, HUD, VA, and USDA will take additional steps to prevent foreclosures on mortgages backed by those agencies until borrowers are reviewed for COVID-19 streamlined loss mitigation options that are affordable, while FHFA will continue to work with Fannie Mae and Freddie Mac to ensure that borrowers are evaluated for home retention solutions prior to any referral to foreclosure.
In addition, HUD, VA, and USDA will also continue to allow homeowners who have not taken advantage of forbearance to date to enter into COVID-related forbearance through September 30, 2021, while homeowners with Fannie Mae or Freddie Mac-backed mortgages who have COVID-related hardships will also continue to be eligible for COVID-related forbearance. Finally, HUD, VA, and USDA will be announcing additional steps in July to offer borrowers payment reduction options that will enable more homeowners to stay in their homes.
This probably makes no sense, but was hoping if the supply significantly increased with foreclosures, even if they were cheaper homes, maybe someone would buy the 200k foreclosed home rather than spend 300k that would open the 300k home up for someone that was going to initially spend 400k and so on. Basically I figured that a greater supply would pull the market down no matter the price range ultimately as things even out but I could be very mistaken on this.
- scorcher31
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Re: House prices expected to drop?
Not sure if there is a price per squarefoot indicator that shows historical data, never thought about it like this. I am fairly sure its at a peak at least since the 2008 crash. That doesn't tell me if it is going to go up or down though from here.KlangFool wrote: ↑Sat Jun 26, 2021 1:36 pmscorcher31,scorcher31 wrote: ↑Sat Jun 26, 2021 8:12 amIt's actionable as in do I keep waiting/try to wait it out as I have an Ok home vs. just begin actively searching/buy. I don't want to get stuck in a FOMO situation and regret it with this housing market.
Housing is local.
I do not understand why you need to ask this question. As long as your area is old enough and has houses older than 20 to 30 years, you could check the price per square feet trend for the last 20 to 30 years. Hence, you could know whether the house price is at a peak, bottom, or in between.
For example, in my area, the median price between the peak and bottom is around $200 per square feet. If and when the price drop below $200 per square feet, it may be a good time to buy.
KlangFool
Re: House prices expected to drop?
My personal hunch is that there are swarms of cash-rich investors (or investors with easy access to cash from hard-money lenders) who will quickly buy up any foreclosures hitting the market with the idea of repairing and flipping them to retail buyers. Flippers have been starved for inventory in many areas of the country due to one of their major sources (foreclosures) having dried up over the last year.scorcher31 wrote: ↑Sat Jun 26, 2021 1:38 pm
This probably makes no sense, but was hoping if the supply significantly increased with foreclosures, even if they were cheaper homes, maybe someone would buy the 200k foreclosed home rather than spend 300k that would open the 300k home up for someone that was going to initially spend 400k and so on. Basically I figured that a greater supply would pull the market down no matter the price range ultimately as things even out but I could be very mistaken on this.
There are enough eager buyers out there in many markets to completely devour even a tripling of current supply in no time at all.
Re: House prices expected to drop?
scorcher31,scorcher31 wrote: ↑Sat Jun 26, 2021 1:43 pmNot sure if there is a price per squarefoot indicator that shows historical data, never thought about it like this. I am fairly sure its at a peak at least since the 2008 crash. That doesn't tell me if it is going to go up or down though from here.KlangFool wrote: ↑Sat Jun 26, 2021 1:36 pmscorcher31,scorcher31 wrote: ↑Sat Jun 26, 2021 8:12 amIt's actionable as in do I keep waiting/try to wait it out as I have an Ok home vs. just begin actively searching/buy. I don't want to get stuck in a FOMO situation and regret it with this housing market.
Housing is local.
I do not understand why you need to ask this question. As long as your area is old enough and has houses older than 20 to 30 years, you could check the price per square feet trend for the last 20 to 30 years. Hence, you could know whether the house price is at a peak, bottom, or in between.
For example, in my area, the median price between the peak and bottom is around $200 per square feet. If and when the price drop below $200 per square feet, it may be a good time to buy.
KlangFool
<<Not sure if there is a price per squarefoot indicator that shows historical data,>>
Just go to Zillow and check the actual sold price of several houses and divide by their square feet.
<< I am fairly sure its at a peak at least since the 2008 crash.>>
If that is true, why do you think that it will not go down in the future? Your area has at least housing history of 100+ years. It goes in cycles.
You would see this by going back 30 to 40 years in your area. It goes in cycle.
KlangFool
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- scorcher31
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Re: House prices expected to drop?
Appreciate the input. I had not realized the 2008 event was such a rare event. I figured it just happened every several years or so like a correction or a bear market. Your advise may truly be the most sound/logical.mrspock wrote: ↑Sat Jun 26, 2021 1:32 pm A few thoughts on the housing market, as I’ve recently bought and sold in the last 6 weeks:
- Listen to the Animal Spirits pod cast on this topic, the fellow they have on makes a very compelling case why waiting is a very bad idea. Essentially, houses are not stocks and none of the factors in 2008 are in play here.
- Look for properties which are pre-inspected, for both pests and general inspection. When I sold my home folks waived contingencies because they already had access to this information (as I had the inspections already done), it’s unlikely they would have otherwise.
- Buy what you can afford now — maybe even a bit of a stretch. Don’t try for perfection here, if prices do drop in the future you can always upgrade. I’ve bought 4 homes in my life, never have prices dropped below what I paid between these purchases — including 2008 (they never fell far enough to touch what I paid for my first home).
- 2008 was a very rare event, pretend it never happened. Plan for the average case not the uncommon case. 2008 was like being up against somebody with quad aces, and hitting a royal flush on the river. Sure it’s nice when it happens, but you don’t play poker expecting that royal flush on the river (with quad aces being represented), or you will lose nearly all the time.
- Inflation is a real risk right now, you can’t pump 4-5T and more coming, and not have any consequences. Housing prices are starting to reflect this. I think if you choose to wait, you could get yourself into a terrible corner, as prices may only rise and you will wait, and wait … and wait to justify your original decision and end up costing yourself even more money. It’s a bit like those who sold in February last year, failing to time the buy-in and then seeing the market sky rocket past where they sold. This is a horrible mind job, to be in, and one you should avoid here.
In summary, the better risk to take here given the variables at play is to buy what you can afford. If prices do drop, consider upgrading. You might lose some on your home but the other guy will have lost a ton more, which you will benefit from. If prices don’t drop — the more likely scenario IMO, you are in the game and you don’t get priced out.
This is one of those situations where your don’t want to let perfect be the enemy of the good.
I guess to some degree I'm wondering if the current housing market is a bubbles as well considering the odd event that was the pandemic. Economy has almost recovered, but is not really greater than it was in 2019. Given that not sure where individual people are getting significantly increased assets for house prices to increase so much more proportionally. I can't imagine a few thousand dollars from stimulus per person does very much toward buying a house.
Re: House prices expected to drop?
mrspock,mrspock wrote: ↑Sat Jun 26, 2021 1:32 pm
- 2008 was a very rare event, pretend it never happened. Plan for the average case not the uncommon case. 2008 was like being up against somebody with quad aces, and hitting a royal flush on the river. Sure it’s nice when it happens, but you don’t play poker expecting that royal flush on the river (with quad aces being represented), or you will lose nearly all the time.
Housing is local. That is not true in my area. We have several of those 10 to 20 years real estate cycles before.
KlangFool
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Re: House prices expected to drop?
scorcher31,scorcher31 wrote: ↑Sat Jun 26, 2021 1:49 pm
Appreciate the input. I had not realized the 2008 event was such a rare event. I figured it just happened every several years or so like a correction or a bear market. Your advise may truly be the most sound/logical.
That may not be true for your area. Please check the pricing history of the houses in your area over the last 40 years.
KlangFool
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Re: House prices expected to drop?
Regrettably I know little about real-estate, but I will definitely check out zillow and try to figure out the price per squarefoot in my areas over the years.KlangFool wrote: ↑Sat Jun 26, 2021 1:53 pmscorcher31,scorcher31 wrote: ↑Sat Jun 26, 2021 1:49 pm
Appreciate the input. I had not realized the 2008 event was such a rare event. I figured it just happened every several years or so like a correction or a bear market. Your advise may truly be the most sound/logical.
That may not be true for your area. Please check the pricing history of the houses in your area over the last 40 years.
KlangFool
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Re: House prices expected to drop?
“I guess to some degree I'm wondering if the current housing market is a bubbles as well considering the odd event that was the pandemic. Economy has almost recovered, but is not really greater than it was in 2019. Given that not sure where individual people are getting significantly increased assets for house prices to increase so much more proportionally. I can't imagine a few thousand dollars from stimulus per person does very much toward buying a house.”
Stock market is at all-time high. RSU compensation is too. People saved a lot of money during the pandemic by not traveling. How did your net worth increase the last few years?
Stock market is at all-time high. RSU compensation is too. People saved a lot of money during the pandemic by not traveling. How did your net worth increase the last few years?
- scorcher31
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Re: House prices expected to drop?
Significantly increased but saving it for retirement which comes first. I have to assume I am in the minority however and most people were pretty hurt by the pandemic financially. All I hear is that the economy has not fully recovered.lazynovice wrote: ↑Sat Jun 26, 2021 1:57 pm “I guess to some degree I'm wondering if the current housing market is a bubbles as well considering the odd event that was the pandemic. Economy has almost recovered, but is not really greater than it was in 2019. Given that not sure where individual people are getting significantly increased assets for house prices to increase so much more proportionally. I can't imagine a few thousand dollars from stimulus per person does very much toward buying a house.”
Stock market is at all-time high. RSU compensation is too. People saved a lot of money during the pandemic by not traveling. How did your net worth increase the last few years?
Re: House prices expected to drop?
+ 1 on Mr. Spock’s reference to Animal Spirits analysis on housing market (two older Millennial investment guys). The other thing I don’t think anyone has mentioned here is that the 30s age bracket in the US is huge by absolute population count by historical standards. Much larger 30s population bulge than for my generation (Gen X). Those people are now in prime buying years so in my view this housing market has legs just based on such a large generational bulge of prime home-age buyers. Also, housing prices tend to be very sticky. People anchor to a price in their head and won’t drop price even if market softens unless they have to sell.scorcher31 wrote: ↑Sat Jun 26, 2021 1:49 pmAppreciate the input. I had not realized the 2008 event was such a rare event. I figured it just happened every several years or so like a correction or a bear market. Your advise may truly be the most sound/logical.mrspock wrote: ↑Sat Jun 26, 2021 1:32 pm A few thoughts on the housing market, as I’ve recently bought and sold in the last 6 weeks:
- Listen to the Animal Spirits pod cast on this topic, the fellow they have on makes a very compelling case why waiting is a very bad idea. Essentially, houses are not stocks and none of the factors in 2008 are in play here.
- Look for properties which are pre-inspected, for both pests and general inspection. When I sold my home folks waived contingencies because they already had access to this information (as I had the inspections already done), it’s unlikely they would have otherwise.
- Buy what you can afford now — maybe even a bit of a stretch. Don’t try for perfection here, if prices do drop in the future you can always upgrade. I’ve bought 4 homes in my life, never have prices dropped below what I paid between these purchases — including 2008 (they never fell far enough to touch what I paid for my first home).
- 2008 was a very rare event, pretend it never happened. Plan for the average case not the uncommon case. 2008 was like being up against somebody with quad aces, and hitting a royal flush on the river. Sure it’s nice when it happens, but you don’t play poker expecting that royal flush on the river (with quad aces being represented), or you will lose nearly all the time.
- Inflation is a real risk right now, you can’t pump 4-5T and more coming, and not have any consequences. Housing prices are starting to reflect this. I think if you choose to wait, you could get yourself into a terrible corner, as prices may only rise and you will wait, and wait … and wait to justify your original decision and end up costing yourself even more money. It’s a bit like those who sold in February last year, failing to time the buy-in and then seeing the market sky rocket past where they sold. This is a horrible mind job, to be in, and one you should avoid here.
In summary, the better risk to take here given the variables at play is to buy what you can afford. If prices do drop, consider upgrading. You might lose some on your home but the other guy will have lost a ton more, which you will benefit from. If prices don’t drop — the more likely scenario IMO, you are in the game and you don’t get priced out.
This is one of those situations where your don’t want to let perfect be the enemy of the good.
I guess to some degree I'm wondering if the current housing market is a bubbles as well considering the odd event that was the pandemic. Economy has almost recovered, but is not really greater than it was in 2019. Given that not sure where individual people are getting significantly increased assets for house prices to increase so much more proportionally. I can't imagine a few thousand dollars from stimulus per person does very much toward buying a house.
I personally think you’re over-thinking this whole thing. You’ve indicated you’re out of residency (so presumably making at least one decent doctor salary), you’d like a much bigger yard, you’d like a much bigger house, you live somewhere with terrible schools, and you don’t feel like there are many people to socialize with in your neighborhood (apologies if I confused some of the facts with other posters). To me, moving then is a total no-brainer. A house is where you live and has a tremendous impact on quality of life — it’s not an ETF or mutual fund. And housing cycles can last a very long time. You may have to wait 5-10 years (or longer) for the next “bottom” — which still may be higher prices than today.
If you can swing two house payments for a period of time my advice is as follows: Wait until a house hits the market that you like and then move quickly and aggressively. If you get it, sell your house. In meantime de-junk your house and get it ready to list.
Good luck!
Re: House prices expected to drop?
I recently upsized to a townhome for $100k (18%) under it's taxable value. I am trying to sell a condo for $10k (5%) under it's taxable value in the same neighborhood.
Some places are down right now. I live in a 98 walk score neighborhood, I think things will go back up what with all the cycle tracks and dedicated bus lanes they are putting in our neighborhood plus all the restaurants and bars opening back up.
Some places are down right now. I live in a 98 walk score neighborhood, I think things will go back up what with all the cycle tracks and dedicated bus lanes they are putting in our neighborhood plus all the restaurants and bars opening back up.
Never look back unless you are planning to go that way