Tales from this insane real estate market

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ASpenderInRecovery
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Tales from this insane real estate market

Post by ASpenderInRecovery »

Bogleheads,

Figured I'd share my experience over the past 6 months attempting to compete in this insane real estate market, and why we are happy to call off the search. Similarly to many others, my wife and I were interested in moving into a larger and more updated home that we could grow our family in. Prior to Covid, we had been saving, so we now had a 300k down-payment and were targeting homes up to $1.1M in Northern VA. We dreamed of finally having that gourmet kitchen, open concept from the kitchen to the living room, having a deck, screened-in porch, more bedrooms, and some updated bathrooms. Fortunately for us we are happy to stay put in our townhouse, and this whole experience taught us how fortunate we are to live in a modest townhouse, have a generous dual income, and high savings rate by living far beneath our means. I know we won't live in this townhouse forever, but we won't consider moving again for several years. Since losing the last house, I've decided to take it as a learning lesson and immediately paid off my wife's remaining low interest student loans, and will be moving a good chunk of the former down payment into my taxable. As Oscar Wilde once said, "what seems to us as bitter trials are often blessings in disguise."

The Properties:
- Home #1 - listed at 899k - Toured twice in late October, offered 15k over asking with a 10k escalation clause, was beat by 45k over asking offer
- Home #2 - listed at 950k - toured once in Feb, contemplated making an offer, seller accepted a 190k over asking offer 2 days after listing with no
contingencies
- Home #3 - listed at 999k - visited outside of home multiple times in early March to scout the property, contacted seller pre-market to offer 100k
over asking if we could tour privately, was beat by a 150k over asking sight-unseen pre-market offer with no contingencies.
- Home #4 - listed at 999k - toured 3 times last week, lead with a 70k over asking with 35k escalation (105k over asking) and learned today we were
beat by a 200k over asking offer with no contingencies

What We Learned:
- There are no rules in this real estate market
- What people are willing to pay is totally unrelated to the underlying value, lot, size, condition of the home
- Every home sells for over asking, you have to be willing to overpay (10-20%) to buy a home right now
- You are unlikely to be considered with any contingency in your offer, you must accept the risk of no appraisal or inspection contingency
- Your agent will only advise you to keep upping your offer to win a property
runner3081
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Re: Tales from this insane real estate market

Post by runner3081 »

There is always one rule, regardless of the market. Something is worth what someone is willing to pay for it.

Of course realtors want you to up the offer. They want to cash out their commission and not keep going in the search.
TRC
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Re: Tales from this insane real estate market

Post by TRC »

Good for you and smart move. In the words of Warren Buffet - "Be fearful when others are greedy and greedy when others are fearful".
lazynovice
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Re: Tales from this insane real estate market

Post by lazynovice »

I have owned 4 houses. Bought the first one with no inspection because I was young and dumb. I would never buy a house without an inspection, so like you I would have to wait for the market to cool down somewhat.
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baconavocado
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Re: Tales from this insane real estate market

Post by baconavocado »

We once bought a house in this type of market and it didn't appreciate at all for 10 years. The value actually fell for several years during that decade.

I would sit out the market and rent for a year or two.
Cycle
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Re: Tales from this insane real estate market

Post by Cycle »

There are some deals to be had for condos, esp 1br ones, great for seniors downsizing.

We made an offer and it was accepted on a dated place that hasn't been updated since 1978 when it was built and the 92 year old owner said the photo of our kids we sent with our offer was charming. He was the original owner.

Our 1000sqft condo was feeling a bit tight, so this 2400sqft 3br/3ba townhome one block away should be much better.

This will be my forth kitchen remodel in 6 years (investment properties)... Hoping this will be the last one I do for a while.

The home is actually tax valued $50k more than we offered and is in a car-free compatible downtown neighborhood

Our interest rate is 2.25% on a 15 year. I even saw a 2.125% rate today, tho we locked yesterday.
Last edited by Cycle on Tue Mar 23, 2021 8:40 pm, edited 1 time in total.
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ipdiddly
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Re: Tales from this insane real estate market

Post by ipdiddly »

Unfortunately, this is the result of a supply and demand imbalance. Too few houses available for too many buyers. Many folks have decided that apartment living in the city didn't work out so well during Covid, with all the fun things in the city closed. No bars. No restaurants. No theater. Etc. Plus being cooped up in a small apartment 24/7 while working from 'home' got stale real fast. So everyone, all at once, decided they wanted a single family home in the 'burbs.' And they are willing to pay up just to get in. You have to wonder where all the money is coming from. After all, no matter how you slice it, buying a $1+MM home ain't cheap. You still have to make the monthly payments. It would seem that all that media and political coverage about folks being out of work and struggling is a bit hard to fathom given the escalation in house prices. I don't doubt many are struggling. But clearly many have done quite well regardless of Covid. With no place to spend their money, everyone is going big on housing. All you can do is wait until the supply catches up with demand, then house prices will moderate a bit - or at least not escalate as rapidly.
softmax
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Re: Tales from this insane real estate market

Post by softmax »

I feel you. It's unfortunate to be in this market and sometimes I feel bad for being a millennial (how come we work so hard but the quality of life is rapidly declining???).
I think as long as your cashflow is sufficient to help you achieve your financial goals, it's probably a better idea to continue shopping. Nobody really knows what will happen to this market.
finite_difference
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Re: Tales from this insane real estate market

Post by finite_difference »

NoVa is turning into CA?! :wink:

It’s hard to beat sight unseen offers 15 to 20% above ask. It makes sense to stay put. A big house will be a lot of work and money.
Last edited by finite_difference on Tue Mar 23, 2021 9:00 pm, edited 1 time in total.
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Cycle
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Re: Tales from this insane real estate market

Post by Cycle »

"Housing is expensive today, but it's ludicrous tomorrow."
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smatter
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Re: Tales from this insane real estate market

Post by smatter »

Sorry to hear... I think I replied in an earlier thread of yours.

We are seeing similar behavior in our neighborhood in Bethesda on the other side of the Potomac ocean.

This is since the fall... houses are regularly selling for 100-200K over asking. Tear down prices are into the $2.1-2.2M range... from $1.8-1.9M last year.

Seems like a good time to sit tight.

Reminds me of the Seattle market a few years ago. We considered relocating there for a job and the RE market was one of the factors that scared us off.
stocknoob4111
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Re: Tales from this insane real estate market

Post by stocknoob4111 »

The real estate market is once again in an epic bubble, probably more acute than 2008, history tells us time and again that these things end badly, very badly. History also tells us that there are a large number of people who are active participants in the frenzy who will eventually claim that they were victims and were blindsided.

The only thing to do is to stand back and watch from the sidelines as the mania plays out.
Normchad
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Re: Tales from this insane real estate market

Post by Normchad »

finite_difference wrote: Tue Mar 23, 2021 8:52 pm NoVa is turning into CA?! :wink:

It’s hard to beat sight unseen offers 15 to 20% above ask. It makes sense to stay put. A big house will be a lot of work and money.
We live in NOVA. According to Zillow, my Zestimate has increased from 700K to 750K in the last 30 days..... this is lunacy.....
SuperXmas
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Re: Tales from this insane real estate market

Post by SuperXmas »

Feels a lot like 2007-2008 right?
Normchad
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Re: Tales from this insane real estate market

Post by Normchad »

SuperXmas wrote: Tue Mar 23, 2021 9:15 pm Feels a lot like 2007-2008 right?
It sort of feels like that. The big difference I see is that there was an enormous home building boom in our area in 2007, and right now, nothing is getting built.
Shalom Aleichem
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Re: Tales from this insane real estate market

Post by Shalom Aleichem »

stocknoob4111 wrote: Tue Mar 23, 2021 9:11 pm The real estate market is once again in an epic bubble, probably more acute than 2008, history tells us time and again that these things end badly, very badly. History also tells us that there are a large number of people who are active participants in the frenzy who will eventually claim that they were victims and were blindsided.

The only thing to do is to stand back and watch from the sidelines as the mania plays out.
Actually I don't know if I agree. In the 2008 bubble I was listening to a lot of AM radio. A lot of ads were for mortgage refi's. They said "Refi now - we can get your 30-year fixed lower than what you're paying now." Month after month it was the same but with lower and lower rates. At some point, presumably after everyone who could refinance did refinance, the ads changed to "get rid of your 30Y - get a 15Y and you'll get a much lower rate!" Over the course of time this changed to "Most people in CA live in their house for only 5Y. You're paying too much. Get rid of your 15Y fixed and get a 5Y ARM for much lower rate - you'll have sold your house before it recalculates!"

That was when I knew we were in trouble. I knew there would be big housing crash. Unfortunately for me, I didn't know how to monetize it. Why? When I was starting out I couldn't afford a regular 30Y, I could only afford a 3Y ARM (I think). The mortgage guy said no problem - the most it can reset for is 1-2% more than what it is now. And your rate is (let's say) 4% so it could only go as high as 6%. I thought "That's great! I can afford a 2% increase in the mortgage." What I didn't realize is how it was set up was something like 50% of my payment was principal (maybe less) and 50% (maybe more) was in interest. So if the interest goes up from 4 to 6, that's a 50% (!) interest jump, and if interest is 50% of my payment, that's a 25% (!) increase in my payment! I couldn't afford it!

So I assumed the ads are successful and a lot of people who have fixed rate mortgages are going to be taking out ARM's, probably to get more spending money or buy more house than they could afford. And I knew then that when the rates reset in 3-5Y, those people were not going to be able to afford the new rates - I couldn't. And there would be a lot of people who lost their homes.

Of course not only did I not know how to monetize that (I tried to figure out how but couldn't), but I had no idea how complete and widespread the problem was.

I just refinanced my house. Man did I have to jump through hoops. It is very difficult to get a mortgage now I assume because the banks are either scared of default or the government put more restrictions on them. In either case it doesn't matter - it's frankly hard to get a mortgage even with excellent credit. Hard meaning it takes a long time and the lenders have enormous criteria you must meet and document before they will refinance you. In contrast to NINJA (No income, no job) loans from 2008, loans today require documentation to be able to pay. So I don't think I can explain why the prices are so high but I think this market is nothing like 2008 for the reasons above. The only people qualifying for loans are well-qualified people. Not like 2008.
aj44
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Re: Tales from this insane real estate market

Post by aj44 »

Heck, I'll say this feels 2004-ish, look out below in 2-4 years.
Shalom Aleichem
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Re: Tales from this insane real estate market

Post by Shalom Aleichem »

SuperXmas wrote: Tue Mar 23, 2021 9:15 pm Feels a lot like 2007-2008 right?
I live in the LA suburbs. A friend sold his house out here to buy something bigger. He said it is a seller's market. As a seller he had multiple and many frankly offers well above listing. As a buyer he's competing against a lot of well-financed competitors. In LA at least his impression is a lot of people in the city realized we just had riots and there was no real police presence, it was anarchy, and no place to raise their kids. His impression was a lot of the increased pricing away from housing is city people realizing they want to raise families but can't trust that the police will keep them safe and so want to move to the suburbs for quality of life. I don't know if that's correct but I've heard that from several people in LA now.
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ResearchMed
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Re: Tales from this insane real estate market

Post by ResearchMed »

SuperXmas wrote: Tue Mar 23, 2021 9:15 pm Feels a lot like 2007-2008 right?
Back then, people were getting mortgages for homes that there was no way they could really afford. That was in part due to loans with a short fixed rate, and then the rate could vary (as in, go up).
There was less vetting by lenders. There was no way that was all going to have a good outcome.

I don't think that is happening now, or at least, we haven't seen any of it in our area.

But yes, many properties are selling incredibly fast, and prices seem crazy.

RM
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Dottie57
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Re: Tales from this insane real estate market

Post by Dottie57 »

Dang! Sounds like I am screwed in buying a new place. Didn’t quite have the money last year, but now that I do, prices are definitely up in my area.
JBTX
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Re: Tales from this insane real estate market

Post by JBTX »

aj44 wrote: Tue Mar 23, 2021 9:30 pm Heck, I'll say this feels 2004-ish, look out below in 2-4 years.
Most likely this. Eventually as economy opens up real estate construction will help to satisfy demand, and at some point it will equalize and maybe even reverse. But this will take at least a couple of years. What happens with interest rates will also obviously be a factor.
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Sandtrap
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Re: Tales from this insane real estate market

Post by Sandtrap »

From a R/E investor's point of view:
In a flat R/E market there is a lot of "low hanging fruit" (great opportunities)
In a hot R/E market (now) there is still "low hanging fruit" but they are harder to find and one has to be very quick (morning of open MLS listing) to get them.

Suggestions:
1. Have a really great and ambitious buyers Realtor agent. One in touch with what is coming on the market, soon to be, etc and well versed in your areas of search. His might be an Associate Broker, etc, but not the average sales realtor agent.
2. Have all your documents ready, pre bank approvals, proof of funds, etc, . . . work that out with your realtor agent.
3. Have a very close and active day to day contact relationship with your realtor agent who is very interested in "you" and very experienced and full time or more than full time and extremely professional. (These are the agents that kick other agents to the curb, real pros). This means that your buyers agent realtor is known in the industry and area and if he/she says you are a hot buyer who will put a signed (all cash is better) DROA in her hand at a moments notice, then that will work great.
4. Be extremely persistent and a sincere and aggressive buyer. Don't waste people's time if you are indecisive or need to "kick tires" or go home and think about things for a week and banter about things endlessly. Be ready to buy the home of your dreams when you find it. When your agent knows that you are committed to that search, then they will work hard for you.
5. Be a little flexible in what and where you want to buy.

Note: This is why active R/E investors (And. GC/Developers doing "flippers") can hop on a property within the lst hour that it is listed on the MLS. Many are so familiar with their markets that they often don't have to go to the open house, see the unit, or have contingencies beyond what's reasonable. And, they usually have all cash on hand and push for a quick 30 day close and keep things simple.

Note: If you "wait until prices drop or the "right time", you may never find that right price and time because the markets are always so dynamic. Don't give up. Keep looking (even it it takes daily for years). Be a bit flexible in what you want. Be ready. Pounce.

Personally: I've invested at market highs and lows and have done consistently well with the right strategies in most units. It takes persistence and patience.

(dislaimer) There are lot's of ways of doing things based on one's personal experience and knowledge. This is just one.

j :D
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Shalom Aleichem
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Re: Tales from this insane real estate market

Post by Shalom Aleichem »

ResearchMed wrote: Tue Mar 23, 2021 9:33 pm
SuperXmas wrote: Tue Mar 23, 2021 9:15 pm Feels a lot like 2007-2008 right?
Back then, people were getting mortgages for homes that there was no way they could really afford. That was in part due to loans with a short fixed rate, and then the rate could vary (as in, go up).
There was less vetting by lenders. There was no way that was all going to have a good outcome.

I don't think that is happening now, or at least, we haven't seen any of it in our area.

But yes, many properties are selling incredibly fast, and prices seem crazy.

RM
Agree. I just refi'd. Man they wanted everything. Every tax document, every bank statement, 401K, investments, EVERYTHING for the last three years!!! Then when they got it they asked for more. Then when they got it, even more. It was a huge headache. Clearly they were vetting me HARD before lending me any money at all. Totally different than back then. Oh and finally when they said they were ready to fund, the calendar changed to the next month so they then wanted all the data updated ... new bank statements, etc for the new month.

It was worth it though!
Kookaburra
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Re: Tales from this insane real estate market

Post by Kookaburra »

ASpenderInRecovery wrote: Tue Mar 23, 2021 8:11 pm What We Learned:
- There are no rules in this real estate market
- What people are willing to pay is totally unrelated to the underlying value, lot, size, condition of the home
- Every home sells for over asking, you have to be willing to overpay (10-20%) to buy a home right now
- You are unlikely to be considered with any contingency in your offer, you must accept the risk of no appraisal or inspection contingency
- Your agent will only advise you to keep upping your offer to win a property
Your experience echoes with my own. It’s frustrating. I decided to get my life back and unplug from it all.

In addition to your list of what one must be willing to do, I would add, also be prepared to pay with all cash. Even on the $1M+ homes.

Which brings me to a question I’ve had for awhile...

For those buyers who are willing to waive inspection and appraisal contingencies, but who cannot afford to pay in all cash, is it recommended to keep the financing contingency in place, or should one be OK getting rid of that contingency too? Naturally I’d feel better with it in there, just in case the lender has an unexpected delay or something. But I’m curious how much that aspect matters to a seller. Assume the buyer has a solid down payment (30-50%) and a credit-and income verified pre-approval letter.
SuperXmas
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Re: Tales from this insane real estate market

Post by SuperXmas »

Yea, I wasn’t saying that it feels like 2007-2008 bc I think it’s identical, or even that were in a bubble. I actually think there are sound reasons why we are seeing this home price appreciation and it’s likely to continue, albeit at a slower pace as interest rates rise, housing stock improves, etc. But the FOMO, unanchored selling prices, waiving appraisals, buying properties sight-unseen are all emblematic of excessive risk taking that feels like 2007.
ResearchMed wrote: Tue Mar 23, 2021 9:33 pm
SuperXmas wrote: Tue Mar 23, 2021 9:15 pm Feels a lot like 2007-2008 right?
Back then, people were getting mortgages for homes that there was no way they could really afford. That was in part due to loans with a short fixed rate, and then the rate could vary (as in, go up).
There was less vetting by lenders. There was no way that was all going to have a good outcome.

I don't think that is happening now, or at least, we haven't seen any of it in our area.

But yes, many properties are selling incredibly fast, and prices seem crazy.

RM
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Nate79
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Re: Tales from this insane real estate market

Post by Nate79 »

All the talk about significant offers above asking price makes me wonder why the houses are being mispriced from the beginning with the listing.
dachshunddad
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Re: Tales from this insane real estate market

Post by dachshunddad »

Good plan to wait. I’ve only ever bought properties in a “cool” market and when there were no other offers. I’ve had to rent or wait for the right time but you get a great deal when you are the only offer. I don’t get emotionally attached to a property though so it isn’t hard. I’m more emotionally attached to a good deal :happy
Monsterflockster
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Re: Tales from this insane real estate market

Post by Monsterflockster »

Bought a nice little house near the beach in a planned development for 570k two years ago. The exact same house just sold for 915k. :shock:
abracadabra11
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Re: Tales from this insane real estate market

Post by abracadabra11 »

We're also searching in the Northern VA area and have made the decision to wait and monitor. Based on what we've seen the last few months, I don't expect to purchase a home in 2021. Competition for homes is just too high and we're unwilling to make the concessions necessary to buy in this market. We can wait.
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Re: Tales from this insane real estate market

Post by AerialWombat »

.....
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For entertainment purposes only.
lazynovice
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Re: Tales from this insane real estate market

Post by lazynovice »

Nate79 wrote: Tue Mar 23, 2021 9:55 pm All the talk about significant offers above asking price makes me wonder why the houses are being mispriced from the beginning with the listing.
This is what I have been saying! If your realtor is pricing your house at $999k and you end up getting 1.2million, your realtor was gambling with your money. 3% of 200k is maybe not worth the extra time for them but the 94% of 200k I get to keep is worth it to me.

I think the way houses are priced has changed. It used to be that you listed houses for more than you thought you could get and buyers negotiated down. Now it seems you price lower than you can get to get buyers in the door and then the bidding drives the price up. People who have not adjusted to the new pricing system take a few failed offers to figure out the world has changed on them.
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unclescrooge
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Re: Tales from this insane real estate market

Post by unclescrooge »

Shalom Aleichem wrote: Tue Mar 23, 2021 9:32 pm
SuperXmas wrote: Tue Mar 23, 2021 9:15 pm Feels a lot like 2007-2008 right?
I live in the LA suburbs. A friend sold his house out here to buy something bigger. He said it is a seller's market. As a seller he had multiple and many frankly offers well above listing. As a buyer he's competing against a lot of well-financed competitors. In LA at least his impression is a lot of people in the city realized we just had riots and there was no real police presence, it was anarchy, and no place to raise their kids. His impression was a lot of the increased pricing away from housing is city people realizing they want to raise families but can't trust that the police will keep them safe and so want to move to the suburbs for quality of life. I don't know if that's correct but I've heard that from several people in LA now.
I live in LA and didn't realize how unsafe it's become. I must have slept through all these riots.
The market is insane though. Dozens of offers on each home, minimum $100k over ask, multiple all-cash offers with no contingencies. Crazy.
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MP123
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Re: Tales from this insane real estate market

Post by MP123 »

Kookaburra wrote: Tue Mar 23, 2021 9:51 pm Which brings me to a question I’ve had for awhile...

For those buyers who are willing to waive inspection and appraisal contingencies, but who cannot afford to pay in all cash, is it recommended to keep the financing contingency in place, or should one be OK getting rid of that contingency too? Naturally I’d feel better with it in there, just in case the lender has an unexpected delay or something. But I’m curious how much that aspect matters to a seller. Assume the buyer has a solid down payment (30-50%) and a credit-and income verified pre-approval letter.
If you aren't paying cash I don't think you can waive the appraisal because the bank will require that to fund your loan.

I also don't think you want to waive the financing contingency because if you can't get a loan for whatever reason then likely you loose your earnest money. As a seller I would assume a de facto financing contingency if it wasn't a cash sale and treat the offer accordingly.
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Re: Tales from this insane real estate market

Post by tomsense76 »

finite_difference wrote: Tue Mar 23, 2021 8:52 pm NoVa is turning into CA?! :wink:

It’s hard to beat sight unseen offers 15 to 20% above ask. It makes sense to stay put. A big house will be a lot of work and money.
Hehe yeah guessing you already know, but NoVa has its own ecosystem of tech companies. Not to mention Amazon's 2nd HQ coming soon
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bottlecap
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Re: Tales from this insane real estate market

Post by bottlecap »

I hear ya, op. We're calling off our search as well.

We shoulda bought bigger ten years ago. But we tried to be responsible...

JT
BernardShakey
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Re: Tales from this insane real estate market

Post by BernardShakey »

Shalom Aleichem wrote: Tue Mar 23, 2021 9:32 pm
SuperXmas wrote: Tue Mar 23, 2021 9:15 pm Feels a lot like 2007-2008 right?
I live in the LA suburbs. A friend sold his house out here to buy something bigger. He said it is a seller's market. As a seller he had multiple and many frankly offers well above listing. As a buyer he's competing against a lot of well-financed competitors. In LA at least his impression is a lot of people in the city realized we just had riots and there was no real police presence, it was anarchy, and no place to raise their kids. His impression was a lot of the increased pricing away from housing is city people realizing they want to raise families but can't trust that the police will keep them safe and so want to move to the suburbs for quality of life. I don't know if that's correct but I've heard that from several people in LA now.
I don't think your stated reasons are correct. LA was mildly impacted by the summer 2020 rioting. Rather, people got tired of being cramped in city apartments during Covid with everything closed down and also having to work from home and needing more space. That's pushing people to the suburbs and prices up.
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Shalom Aleichem
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Re: Tales from this insane real estate market

Post by Shalom Aleichem »

BernardShakey wrote: Tue Mar 23, 2021 11:25 pm
Shalom Aleichem wrote: Tue Mar 23, 2021 9:32 pm
SuperXmas wrote: Tue Mar 23, 2021 9:15 pm Feels a lot like 2007-2008 right?
I live in the LA suburbs. A friend sold his house out here to buy something bigger. He said it is a seller's market. As a seller he had multiple and many frankly offers well above listing. As a buyer he's competing against a lot of well-financed competitors. In LA at least his impression is a lot of people in the city realized we just had riots and there was no real police presence, it was anarchy, and no place to raise their kids. His impression was a lot of the increased pricing away from housing is city people realizing they want to raise families but can't trust that the police will keep them safe and so want to move to the suburbs for quality of life. I don't know if that's correct but I've heard that from several people in LA now.
I don't think your stated reasons are correct. LA was mildly impacted by the summer 2020 rioting. Rather, people got tired of being cramped in city apartments during Covid with everything closed down and also having to work from home and needing more space. That's pushing people to the suburbs and prices up.
I don’t disagree with you. I’m just saying what others in the city told me. Quality of life is less than before. Homelessness and similar out of control. Less quality fir raising a family.
quantAndHold
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Re: Tales from this insane real estate market

Post by quantAndHold »

Nate79 wrote: Tue Mar 23, 2021 9:55 pm All the talk about significant offers above asking price makes me wonder why the houses are being mispriced from the beginning with the listing.
I can talk about when this happened to me as a seller. We didn’t want a bidding war, we just wanted to get a fair price. We looked at the comps, and came up with a price that we thought the place would sell for. The day before we put it on the market, our realtor brought in a friend who specialized specifically in our neighborhood, he thought our price was about 5% low, so we listed it at the price he suggested. The day after we listed it, a house in the next block that was a very close comp closed and turned up in the comps...for $175k above our price. Ours got 54 showings and six offers in a week, all of them at least $100k above our asking price. The bottom line was that the market price was going up so fast that we couldn’t keep up.
Yes, I’m really that pedantic.
Shalom Aleichem
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Re: Tales from this insane real estate market

Post by Shalom Aleichem »

unclescrooge wrote: Tue Mar 23, 2021 10:43 pm
Shalom Aleichem wrote: Tue Mar 23, 2021 9:32 pm
SuperXmas wrote: Tue Mar 23, 2021 9:15 pm Feels a lot like 2007-2008 right?
I live in the LA suburbs. A friend sold his house out here to buy something bigger. He said it is a seller's market. As a seller he had multiple and many frankly offers well above listing. As a buyer he's competing against a lot of well-financed competitors. In LA at least his impression is a lot of people in the city realized we just had riots and there was no real police presence, it was anarchy, and no place to raise their kids. His impression was a lot of the increased pricing away from housing is city people realizing they want to raise families but can't trust that the police will keep them safe and so want to move to the suburbs for quality of life. I don't know if that's correct but I've heard that from several people in LA now.
I live in LA and didn't realize how unsafe it's become. I must have slept through all these riots.
The market is insane though. Dozens of offers on each home, minimum $100k over ask, multiple all-cash offers with no contingencies. Crazy.
Let’s say unrest rather than riots.
quantAndHold
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Re: Tales from this insane real estate market

Post by quantAndHold »

Shalom Aleichem wrote: Tue Mar 23, 2021 11:37 pm
BernardShakey wrote: Tue Mar 23, 2021 11:25 pm
Shalom Aleichem wrote: Tue Mar 23, 2021 9:32 pm
SuperXmas wrote: Tue Mar 23, 2021 9:15 pm Feels a lot like 2007-2008 right?
I live in the LA suburbs. A friend sold his house out here to buy something bigger. He said it is a seller's market. As a seller he had multiple and many frankly offers well above listing. As a buyer he's competing against a lot of well-financed competitors. In LA at least his impression is a lot of people in the city realized we just had riots and there was no real police presence, it was anarchy, and no place to raise their kids. His impression was a lot of the increased pricing away from housing is city people realizing they want to raise families but can't trust that the police will keep them safe and so want to move to the suburbs for quality of life. I don't know if that's correct but I've heard that from several people in LA now.
I don't think your stated reasons are correct. LA was mildly impacted by the summer 2020 rioting. Rather, people got tired of being cramped in city apartments during Covid with everything closed down and also having to work from home and needing more space. That's pushing people to the suburbs and prices up.
I don’t disagree with you. I’m just saying what others in the city told me. Quality of life is less than before. Homelessness and similar out of control. Less quality fir raising a family.
Meh. My brother and his family bought a place in the suburbs over the summer. It was totally about the pandemic dragging on and their needs changing as a result. In general, they needed more space because everyone was home all the time, and couldn’t afford the space they needed without leaving the city. The protests weren’t a factor at all.
Yes, I’m really that pedantic.
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Re: Tales from this insane real estate market

Post by LadyGeek »

Let's stay focused on the real estate, not the LA protests.
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ponyboy
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Re: Tales from this insane real estate market

Post by ponyboy »

Normchad wrote: Tue Mar 23, 2021 9:15 pm
finite_difference wrote: Tue Mar 23, 2021 8:52 pm NoVa is turning into CA?! :wink:

It’s hard to beat sight unseen offers 15 to 20% above ask. It makes sense to stay put. A big house will be a lot of work and money.
We live in NOVA. According to Zillow, my Zestimate has increased from 700K to 750K in the last 30 days..... this is lunacy.....
Problem is, your buying power hasnt changed no matter how much your home goes up. ONly way it matters is if you downsize or leave the area.
k3vb0t
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Re: Tales from this insane real estate market

Post by k3vb0t »

ponyboy wrote: Wed Mar 24, 2021 6:41 am Problem is, your buying power hasnt changed no matter how much your home goes up. ONly way it matters is if you downsize or leave the area.
I’m not in NOVA but I’ve been incredibly tempted to list our house for 25-50% more than it’s worth to see if someone bites, buy a used RV, and come back in 2 years when I can buy my house back at it’s actual value. We considered selling to buy another house for about 6 seconds before realizing you can’t turn around and get a deal with your profits because everyone else is buying up those homes, too. It’s crazy.
index2max
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Re: Tales from this insane real estate market

Post by index2max »

Shalom Aleichem wrote: Tue Mar 23, 2021 11:57 pm
unclescrooge wrote: Tue Mar 23, 2021 10:43 pm
Shalom Aleichem wrote: Tue Mar 23, 2021 9:32 pm
SuperXmas wrote: Tue Mar 23, 2021 9:15 pm Feels a lot like 2007-2008 right?
I live in the LA suburbs. A friend sold his house out here to buy something bigger. He said it is a seller's market. As a seller he had multiple and many frankly offers well above listing. As a buyer he's competing against a lot of well-financed competitors. In LA at least his impression is a lot of people in the city realized we just had riots and there was no real police presence, it was anarchy, and no place to raise their kids. His impression was a lot of the increased pricing away from housing is city people realizing they want to raise families but can't trust that the police will keep them safe and so want to move to the suburbs for quality of life. I don't know if that's correct but I've heard that from several people in LA now.
I live in LA and didn't realize how unsafe it's become. I must have slept through all these riots.
The market is insane though. Dozens of offers on each home, minimum $100k over ask, multiple all-cash offers with no contingencies. Crazy.
Let’s say unrest rather than riots.
Exactly. These are fiery, but mostly peaceful protests.

Inflation is below 2% too
ddurrett896
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Re: Tales from this insane real estate market

Post by ddurrett896 »

Normchad wrote: Tue Mar 23, 2021 9:17 pm It sort of feels like that. The big difference I see is that there was an enormous home building boom in our area in 2007, and right now, nothing is getting built.
Something is being built. Have you looked at the price of building materials?

$3 2x4x8 studs selling for $7
$7 sheets of 7/16 OSB selling for $33 and rising every week
$25 sheets of ZIP panels selling for $52 and rising every week
Normchad
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Re: Tales from this insane real estate market

Post by Normchad »

ponyboy wrote: Wed Mar 24, 2021 6:41 am
Normchad wrote: Tue Mar 23, 2021 9:15 pm
finite_difference wrote: Tue Mar 23, 2021 8:52 pm NoVa is turning into CA?! :wink:

It’s hard to beat sight unseen offers 15 to 20% above ask. It makes sense to stay put. A big house will be a lot of work and money.
We live in NOVA. According to Zillow, my Zestimate has increased from 700K to 750K in the last 30 days..... this is lunacy.....
Problem is, your buying power hasnt changed no matter how much your home goes up. ONly way it matters is if you downsize or leave the area.
You are absolutely correct. It’s a bit worse though, everything here is so expensive it really doesn’t even make sense to downsize. (There are no nice 3br/2bath houses here for 350, etc)

I am considering retiring and Mrs big the area though within a year, so I’m watching with keen interest.
vested1
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Re: Tales from this insane real estate market

Post by vested1 »

ddurrett896 wrote: Wed Mar 24, 2021 6:54 am
Normchad wrote: Tue Mar 23, 2021 9:17 pm It sort of feels like that. The big difference I see is that there was an enormous home building boom in our area in 2007, and right now, nothing is getting built.
Something is being built. Have you looked at the price of building materials?

$3 2x4x8 studs selling for $7
$7 sheets of 7/16 OSB selling for $33 and rising every week
$25 sheets of ZIP panels selling for $52 and rising every week
+1
Our granddaughter and her husband were looking to sell their house (only 3 years old) for a 33% profit, buy land and build their dream house. The cost of building materials has skyrocketed so they put it off, having calculated the explosion in construction costs. Lumber prices have increased 130% since this time last year, as well as a significant increase in the cost of all other building materials.

Additionally, if you're planning on selling and renting for awhile you may want to wait in order to avoid being priced out of the escalating market by being stuck with a fixed amount from the sale of your previous home.
stocknoob4111
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Re: Tales from this insane real estate market

Post by stocknoob4111 »

Shalom Aleichem wrote: Tue Mar 23, 2021 9:29 pm Actually I don't know if I agree. In the 2008 bubble I was listening to a lot of AM radio.
Well, we all admit that 2008 was a crazy insane mania, yet prices today are actually higher than the peak of that mania so how does it make logical sense? Interest rates can only explain so much. Incomes have barely risen since then. Why are we at a level that exceeds 2008 - a level that corresponds to the biggest bubble real estate has ever seen?

Put another way - if the 2008 peak price level was the biggest bubble in history and today we are at a level that exceeds that then what justification do we have for prices today that exceed even the biggest bubble in history? Why was the previous price in 2008 "the biggest bubble ever" and yet today when we are higher things are not a bubble and kosher... makes absolutely no sense to me.
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Re: Tales from this insane real estate market

Post by MishkaWorries »

BernardShakey wrote: Tue Mar 23, 2021 11:25 pm
Shalom Aleichem wrote: Tue Mar 23, 2021 9:32 pm
SuperXmas wrote: Tue Mar 23, 2021 9:15 pm Feels a lot like 2007-2008 right?
I live in the LA suburbs. A friend sold his house out here to buy something bigger. He said it is a seller's market. As a seller he had multiple and many frankly offers well above listing. As a buyer he's competing against a lot of well-financed competitors. In LA at least his impression is a lot of people in the city realized we just had riots and there was no real police presence, it was anarchy, and no place to raise their kids. His impression was a lot of the increased pricing away from housing is city people realizing they want to raise families but can't trust that the police will keep them safe and so want to move to the suburbs for quality of life. I don't know if that's correct but I've heard that from several people in LA now.
I don't think your stated reasons are correct. LA was mildly impacted by the summer 2020 rioting. Rather, people got tired of being cramped in city apartments during Covid with everything closed down and also having to work from home and needing more space. That's pushing people to the suburbs and prices up.
I think the summer riots had major impact on the areas affected and almost zero on the rest of the city. So it was very localized and the prices in the affected areas dropped while the unaffected areas prices soared.

We have relatives, retired couple, who lived in a downtown condo that was affected by the riots. Imagine a sweet couple in their 70s huddled together (armed with only kitchen knives) all night listening to sirens, glass breaking, screaming of ethnic slurs, threats of violence and the smell of smoke. Their building had all the first floor windows broken out and people running around inside. They watched out their window as people took 2 hours to remove everything from the liquor store. No police response at all.

They sold last year for about $100,000 less than similar units were bought the summer before.
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fortunefavored
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Re: Tales from this insane real estate market

Post by fortunefavored »

stocknoob4111 wrote: Wed Mar 24, 2021 7:58 am
Shalom Aleichem wrote: Tue Mar 23, 2021 9:29 pm Actually I don't know if I agree. In the 2008 bubble I was listening to a lot of AM radio.
Well, we all admit that 2008 was a crazy insane mania, yet prices today are actually higher than the peak of that mania so how does it make logical sense? Interest rates can only explain so much. Incomes have barely risen since then. Why are we at a level that exceeds 2008 - a level that corresponds to the biggest bubble real estate has ever seen?

Put another way - if the 2008 peak price level was the biggest bubble in history and today we are at a level that exceeds that then what justification do we have for prices today that exceed even the biggest bubble in history? Why was the previous price in 2008 "the biggest bubble ever" and yet today when we are higher things are not a bubble and kosher... makes absolutely no sense to me.
As someone who unfortunately has 3 real estate transactions this year, I think it simply comes down to: a fair number of people have a lot of money.

If you're fortunate enough to work for a public company, compensation has shifted to stock grants - which have, for many companies, sky rocketed.

If you already had money in the stock market (ie, most bogleheads) your holdings went up dramatically in the past year, despite the greater economic pain.

Even though I overpaid for a house, *the whole cost of the house* was less than the growth in my net worth I would expect to see in a normal year.

So you combine "some people have a lot of money" with "limited supply" - and here we are.
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