Housing Market Near You

Quote: DRich

Quote: ChumpChange

Miami Beach walk & talk - Florida: MASSIVE Insurance Increases Starting To BANKRUPT Homeowners

I think these stories are exaggerated for effect. My house insurance went from $3800 to $8200 in one year. I shopped it around and was able to get it for $4200. I was happy with a 10% increase.
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For that you could probably insure a medium size RV and a one man helicopter to launch off the roof.

It's the same around here I know somebody that tried to buy 10 houses and bid over the asking price 10 times and got beat every time. They finally gave up and are just staying where they are.

Quote: DRich

Quote: gamerfreak

Is the housing market near you still completely f$&$ked?

I am in Philadelphia suburbs and inventory is dismally low. Last night I went to an open house and the street was packed with about 50 cars, and touring the house was shoulder to shoulder, like a crowded museum or something.

Even with a somewhat decent budget around $670k, I’ve put in around 10 offers at this point, all $50k-$100k over asking, and keep getting beat by all cash offers and people waiving any inspections or contingencies.

Trying to figure out if I want to wait until the economic shoe drops, or find somewhere else to live.

Is it still this bad everywhere?
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I don't think it is that bad everywhere. Lots of areas are down close to 10% in the last year. Don't get me wrong, it is still expensive.

My wife and I both work from home and we moved about 18 months ago. We ended up buying near the top of the market and my wife flew back and forth between Las Vegas and Florida every week for seven weeks trying to buy a house. She would shop, put an offer in on a house above market price, return home to Las Vegas and find out we didn't get the house. Repeat for seven weeks. I believe we ended up getting the eight or ninth house we made an offer on. I never even saw the house until after driving 2000 miles to move in. I saw it on the day we moved in.

Prices here in Florida are going back down as the market is softer with interest rates being higher. I think I got in at 2.9% and todays rates are over 7%. On my house that alone would cost over $1000 more a month.
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Higher interest rates might help stabilize prices, but will make the overall situation even worse.

The reason everything is so crazy is lack of inventory. Potential sellers can either not afford a lateral move, or don’t want to give up that sweet sweet 2.5% they locked in.

Of course, interest rates don’t matter to cash buyers, of which there are plenty. I partly blame that on PPP loan forgiveness, but more broadly the overall post pandemic boom.

Quote: gamerfreak

The reason everything is so crazy is lack of inventory. Potential sellers can either not afford a lateral move, or don’t want to give up that sweet sweet 2.5% they locked in.

It is deeper than this. One problem is after the 2008 crash lots of development plans were mothballed. From finding land to selling the first house can take 10 years. The same thing happened to used cars, where there were just few at the auctions around 2011-2013 so new car sales took off. But you can build cars far easier than houses. By the late 2010s thing started to come back, but that inventory will only start hitting in a couple years.

But it is deeper than that! New developments tend to be at edges of metro areas. Metros in the east, from Boston to Miami, are mostly built out. New supply of single family homes is just not going to happen like it used to. It can be more profitable to put in apartments. Rentals are such a thing now that there are new single family developments that are not for sale---all rentals!

The question is how does it sustain itself? When I got into mortgages in 2003 a jumbo loan was about $360000. That equates to about $580000 today. And you only got 1-2 at that level a month. Today a jumbo starts at $726,200, or $442600 then. But there are now more "cutout" high cost areas today. Back then the only real cutout I remember was Hawaii. Clearly the top end is pulling everything else up.

The median home price today per a google search is $428,700. Using the rule of thumb that you should not buy more than 300% of annual income that means you need over $140,000 in income to buy at the middle. Just 1/3 of USA households make over $100K.

The USA is on her way to being a society of serfs who will never own their homes. For decades about 2/3 own. Expect that to fall over the next generation. This is really big as less and less home wealth gets passed generation to generation. The difference between black and white wealth levels is largely driven by this.

Expect it to keep getting worse.

The sooner people get over the myth of home ownership, the better. Nothing stifles one's economic potential more than committing to a thirty-year loan on the house at a young age. It's always amazed me that people buy a home for $200,000, spend $350,000 on interest for the loan, sell the house for $400,000 and think they did well.

Quote: billryan

The sooner people get over the myth of home ownership, the better. Nothing stifles one's economic potential more than committing to a thirty-year loan on the house at a young age. It's always amazed me that people buy a home for $200,000, spend $350,000 on interest for the loan, sell the house for $400,000 and think they did well.
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Big disagree.

Buying a home at age 25 was the best thing I could have done.

I paid $150k in 2017 for a small townhouse and now have about $130k in equity.

My mortgage is $900. The cheapest rent in the area is around $2,500 for a dumpy apartment. I’ve had to do almost no maintenance to the house.

Tell me how this is worse than renting?

I thought I read somewhere where that homeowners had a net worth of 30-40 times that of renters. I don't know how that breaks down.

Quote: gamerfreak

Quote: billryan

The sooner people get over the myth of home ownership, the better. Nothing stifles one's economic potential more than committing to a thirty-year loan on the house at a young age. It's always amazed me that people buy a home for $200,000, spend $350,000 on interest for the loan, sell the house for $400,000 and think they did well.
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Big disagree.

Buying a home at age 25 was the best thing I could have done.

I paid $150k in 2017 for a small townhouse and now have about $130k in equity.

My mortgage is $900. The cheapest rent in the area is around $2,500 for a dumpy apartment. I’ve had to do almost no maintenance to the house.

Tell me how this is worse than renting?
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Your equity is a phantom. It's trapped in until you sell; if you sell, you are most likely to move up in house, not down. In that case, you traded one mortgage for another, and they rarely get smaller. Paying interest on an "investment "for the next thirty years makes so much financial sense that the government is willing to subsidize it partially. Why is that?
By the way- $100,000 in a stock tracking fund in 2017 would be worth $230,000 today. A Fantastic Four #1 in 2017 was under $25,000. Today they are close to $200,000.

Seriously- If the banks and the government try to steer people into a thirty-year commitment, it must be a good deal, right?
What have you paid in taxes, upkeep, and insurance since 2017? Pay a HOA? Closing costs? PMI?
Houses generally appreciate, but not always, and prices are cyclical. It's great if you want to sell in a high cycle. Only you'd also be buying in a high cycle.
A real-life example- housing in Vegas peaked around 2007 and didn't recover until 2018. That means people didn't make a dime on their biggest investment in a decade while the stock market was on a fantastic run.
Homeowners tend to spend more time working on their homes than renters; throughout a thirty-year loan, that's thousands of man-hours lost.
It's also about loss of investment opportunity. Every dollar you have tied up in your home is a dollar not available to invest.

I think it'd be the difference between $2,500 and $100K. Over half the country doesn't have $500 to spare.

Quote: billryan

Quote: gamerfreak

Quote: billryan

The sooner people get over the myth of home ownership, the better. Nothing stifles one's economic potential more than committing to a thirty-year loan on the house at a young age. It's always amazed me that people buy a home for $200,000, spend $350,000 on interest for the loan, sell the house for $400,000 and think they did well.
link to original post

Big disagree.

Buying a home at age 25 was the best thing I could have done.

I paid $150k in 2017 for a small townhouse and now have about $130k in equity.

My mortgage is $900. The cheapest rent in the area is around $2,500 for a dumpy apartment. I’ve had to do almost no maintenance to the house.

Tell me how this is worse than renting?
link to original post

Your equity is a phantom. It's trapped in until you sell; if you sell, you are most likely to move up in house, not down. In that case, you traded one mortgage for another, and they rarely get smaller. Paying interest on an "investment "for the next thirty years makes so much financial sense that the government is willing to subsidize it partially. Why is that?
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Still not following. How did buying a house at a young age leave me worse off financially?

Why is paying rent preferable to “throwing money away” on interest?

Equity is not trapped, I have a HELOC that I will use for a down payment on my next house.

Even if we want to pretend that real estate is not an investment, the monthly payment on a mortgage is always going to be less than the rent of a comparable property.