Tales from this insane real estate market

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
SubPar
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Re: Tales from this insane real estate market

Post by SubPar »

RoadThunder wrote: Wed May 11, 2022 4:01 pm My part of Minneapolis metro area is really slowing down. Seeing multiple price drops.
My MPLS suburb home listed today, say it ain't so!!
Last edited by SubPar on Thu May 12, 2022 9:36 am, edited 1 time in total.
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Darth Xanadu
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Re: Tales from this insane real estate market

Post by Darth Xanadu »

jharkin wrote: Thu May 12, 2022 9:06 am
a fellow 495er :sharebeer
Yep... there are a few of us here.
I'm one of them! But in my town, there have been 7 places listed just this week, but less than half of current listings are <$1m so I tend to agree that there is still a lack of affordable housing.

I haven't been tracking sales price vs list or time on the market too closely since I closed on my own house in August of last year.
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snackdog
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Re: Tales from this insane real estate market

Post by snackdog »

The value of our treasured vacation home tripled, so we thought it was better to sell. $1200/sq ft in the middle of nowhere makes no sense at all. In escrow now with an all cash As-as contract. We can use the proceeds to vacation there or anywhere we like the rest of our lives. No more trips to the hardware store on vacation!
Olemiss540
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Re: Tales from this insane real estate market

Post by Olemiss540 »

snackdog wrote: Thu May 12, 2022 9:55 am The value of our treasured vacation home tripled, so we thought it was better to sell. $1200/sq ft in the middle of nowhere makes no sense at all. In escrow now with an all cash As-as contract. We can use the proceeds to vacation there or anywhere we like the rest of our lives. No more trips to the hardware store on vacation!
Where was it located?
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
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orcycle
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Re: Tales from this insane real estate market

Post by orcycle »

snackdog wrote: Thu May 12, 2022 9:55 am The value of our treasured vacation home tripled, so we thought it was better to sell. $1200/sq ft in the middle of nowhere makes no sense at all. In escrow now with an all cash As-as contract. We can use the proceeds to vacation there or anywhere we like the rest of our lives. No more trips to the hardware store on vacation!
How long did it take to triple in value? We bought a vacation property three years ago and it’s apparently doubled in value (Zillow) but not inclined to sell. Congrats on getting such a good return on your investment, and relief from home repairs!
finite_difference
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Re: Tales from this insane real estate market

Post by finite_difference »

FoundingFather wrote: Tue May 10, 2022 11:17 am Ski Resort in Montana: My parents bought a condo for $650,000 the middle of last year - they just got offered $1.6M.
I would totally sell and invest the profit of $800k to fund future ski vacations!

If you invest using 60/40, and spend $10k per one-week ski trip, and take maybe five trips per year, that’s a lot of ski trips!
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh
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FoundingFather
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Re: Tales from this insane real estate market

Post by FoundingFather »

finite_difference wrote: Fri May 13, 2022 10:47 am
FoundingFather wrote: Tue May 10, 2022 11:17 am Ski Resort in Montana: My parents bought a condo for $650,000 the middle of last year - they just got offered $1.6M.
I would totally sell and invest the profit of $800k to fund future ski vacations!

If you invest using 60/40, and spend $10k per one-week ski trip, and take maybe five trips per year, that’s a lot of ski trips!
That idea is definitely up my alley. My parents, however, want to "own where they vacation", so they have resisted my attempts to encourage as you suggest (my parents are getting older, and the burden of keeping up two vacation properties seems to be becoming a bit much for them, hence my bringing up the idea).

I do think that younger generations will be more interesting in not owning a vacation property and just paying for the trip.

Founding Father
"The future belongs to those who believe in the beauty of their dreams." -Addie Philko (writing in “The Times Herald” of Port Huron, Michigan in 1981)
rage_phish
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Re: Tales from this insane real estate market

Post by rage_phish »

snackdog wrote: Thu May 12, 2022 9:55 am The value of our treasured vacation home tripled, so we thought it was better to sell. $1200/sq ft in the middle of nowhere makes no sense at all. In escrow now with an all cash As-as contract. We can use the proceeds to vacation there or anywhere we like the rest of our lives. No more trips to the hardware store on vacation!
Awesome
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catdude
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Re: Tales from this insane real estate market

Post by catdude »

Here in Central Oregon we get a lot of California refugees. The market has been pretty dang hot for several years now... in the time I've owned my current house, its market value has gone up about 65 percent. But things seem to be cooling down. A 4-bed, 2-bath house in my neighborhood was recently listed at $555,000, and just sold for that very same price. No feeding frenzy, apparently. I shared this data point with my real estate agent, and she said it's consistent with what she's been seeing -- prices seem to be leveling off here.
catdude | | Blame somebody else and get on with your life.
NYCaviator
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Re: Tales from this insane real estate market

Post by NYCaviator »

I've kept an eye on the market as well and definitely see it starting to slow. Whereas a month ago I'd get an email with one or two houses that fit our criteria, now its 6-7 and they are sitting. I think some of it is a function of sellers' FOMO. People who were on the fence about selling are now listing and trying to get in on the tail end of the hot market, but it may be a little too late.
NYCaviator
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Re: Tales from this insane real estate market

Post by NYCaviator »

mikejuss wrote: Thu May 12, 2022 9:26 am
220volt wrote: Thu May 12, 2022 9:20 am A friend of mine, an IT professional and his wife bid on a 850k home in Denver. They offered 900k, but go outbid. They offered 950k, got outbid. They offered 1M, but got outbid again. They gave up on a house search, for now.
+1.
This is unfortunately the norm from what I hear from my family who live on the front range. But I think it'll level off. There simply are not that many jobs in Denver that pay enough to support Bay Area home prices. Sure, you'll have transplants from California or Texas who are flush with cash, but most people are not making the kind of income it takes to afford a $1m+ house.
newkidontheblock
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Re: Tales from this insane real estate market

Post by newkidontheblock »

SubPar wrote: Thu May 12, 2022 9:29 am
RoadThunder wrote: Wed May 11, 2022 4:01 pm My part of Minneapolis metro area is really slowing down. Seeing multiple price drops.
My MPLS suburb home listed today, say it ain't so!!
My friend sold his home in Medina on the 1st day it went to market. This was 10 days ago. It is not Minneapolis but a northwest suburb.
Another friend of mine sold his home Plymouth in the first week. This was 3 weeks ago.
Many homes in my neighborhood in Maple Grove sold in the first week.
SubPar
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Re: Tales from this insane real estate market

Post by SubPar »

newkidontheblock wrote: Sat May 14, 2022 6:30 pm
SubPar wrote: Thu May 12, 2022 9:29 am
RoadThunder wrote: Wed May 11, 2022 4:01 pm My part of Minneapolis metro area is really slowing down. Seeing multiple price drops.
My MPLS suburb home listed today, say it ain't so!!
My friend sold his home in Medina on the 1st day it went to market. This was 10 days ago. It is not Minneapolis but a northwest suburb.
Another friend of mine sold his home Plymouth in the first week. This was 3 weeks ago.
Many homes in my neighborhood in Maple Grove sold in the first week.
Follow up: “only” two offers over three days on our SLP home which, admittedly, fell a bit below our expectations (or hopes?) given the amount of traffic and positive feedback it received. Accepted at $15k over ask, waived contingencies, strong earnest. Honestly, do feel like our listing was poorly managed, but we will have secured a strong offer $65k above our basis (originally purchased in early 2018) so I am not complaining.

As (bad) luck would have it, just found out homeowner we’re buying from is wrongly trying to get out of our executed, non-contingent purchase agreement. Apparently their home purchase is in jeopardy and, as they say, crap flows downhill. So that’s not cool. Here’s to hoping we’re not homeless come August.
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fishandgolf
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Re: Tales from this insane real estate market

Post by fishandgolf »

I haven’t followed the rates lately…..what are the current mortgage rates for 15 and 30 year fixed?
manatee2005
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Re: Tales from this insane real estate market

Post by manatee2005 »

fishandgolf wrote: Mon May 16, 2022 9:18 pm I haven’t followed the rates lately…..what are the current mortgage rates for 15 and 30 year fixed?
I don’t know
PowderDay9
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Re: Tales from this insane real estate market

Post by PowderDay9 »

NYCaviator wrote: Sat May 14, 2022 8:09 am I've kept an eye on the market as well and definitely see it starting to slow. Whereas a month ago I'd get an email with one or two houses that fit our criteria, now its 6-7 and they are sitting. I think some of it is a function of sellers' FOMO. People who were on the fence about selling are now listing and trying to get in on the tail end of the hot market, but it may be a little too late.
I'm seeing the same thing in FL. I know several people doing this in my neighborhood. A month or two ago there was nothing for sale and everything that came on the market was swarmed with 10+ offers. Now there's multiple homes available and sitting. Open houses are much less busy. Things are starting to turn. I expect inventory will keep rising and prices to stabilize or possibly start to drop soon.
OrangeKiwi
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Re: Tales from this insane real estate market

Post by OrangeKiwi »

fishandgolf wrote: Mon May 16, 2022 9:18 pm I haven’t followed the rates lately…..what are the current mortgage rates for 15 and 30 year fixed?
For the least risky borrowers, ~0.5% to ~1% less than what this website reports:

https://www.mortgagenewsdaily.com/
dboeger1
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Re: Tales from this insane real estate market

Post by dboeger1 »

FoundingFather wrote: Fri May 13, 2022 3:38 pm I do think that younger generations will be more interesting in not owning a vacation property and just paying for the trip.
For the most part, I agree that this is the more sensible approach for what are essentially discretionary vacation expenses. That being said, it's important to remember that when it comes to owning vs. renting real estate, the former has mostly fixed, bounded costs in today's nominal dollars spread over the life of a very long loan, while the latter rises with inflation in perpetuity. That doesn't automatically make the former a better deal, but you would expect that if the prices of real estate double in an area, at some point, it would become the norm for the prices of vacations in the area to double. Indeed, one of the biggest drivers of inflation during this pandemic inflationary period has been housing, in part because of the access to insanely low mortgage rates, low supply, and already very strong owner equity nationwide. So when doing the calculations comparing the cost of owning a vacation property vs. just paying for hotel rooms or whatever, it's important to be honest and realistic with inflation projections, which is inherently hard to do right now given how chaotic things are around the world. For all we know, vacation property owners might make out like bandits over the next 30 years. I wouldn't bet on it, but only time will tell, which is kind of how holding real estate works.
NiceUnparticularMan
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Re: Tales from this insane real estate market

Post by NiceUnparticularMan »

dboeger1 wrote: Tue May 17, 2022 1:44 am
FoundingFather wrote: Fri May 13, 2022 3:38 pm I do think that younger generations will be more interesting in not owning a vacation property and just paying for the trip.
For the most part, I agree that this is the more sensible approach for what are essentially discretionary vacation expenses. That being said, it's important to remember that when it comes to owning vs. renting real estate, the former has mostly fixed, bounded costs in today's nominal dollars spread over the life of a very long loan, while the latter rises with inflation in perpetuity. That doesn't automatically make the former a better deal, but you would expect that if the prices of real estate double in an area, at some point, it would become the norm for the prices of vacations in the area to double. Indeed, one of the biggest drivers of inflation during this pandemic inflationary period has been housing, in part because of the access to insanely low mortgage rates, low supply, and already very strong owner equity nationwide. So when doing the calculations comparing the cost of owning a vacation property vs. just paying for hotel rooms or whatever, it's important to be honest and realistic with inflation projections, which is inherently hard to do right now given how chaotic things are around the world. For all we know, vacation property owners might make out like bandits over the next 30 years. I wouldn't bet on it, but only time will tell, which is kind of how holding real estate works.
Of course you also have to account for opportunity cost of capital, and you should also do that in real terms. And while on the one hand real rates of return going forward may look a little low given current valuations, particularly in US assets, on the other there is no particular reason to think US real estate is immune to that logic. Moreover, any given piece of real estate is by nature an undiversified investment, and likely carries with it some diversifiable and therefore uncompensated risk . . . .

Similarly, there are typically other costs of owning--maintenance, taxes, insurance, utilities, and so on--and those also might tend to go up real. Indeed, that is part of why rents have to go up real, just to cover those other costs the landlord is facing.

Anyway, the way the math typically works out, you need the vacation property to be occupied some particular fraction of the time in order to reach an estimated breakeven point with just renting comparable vacation properties. That can be by the owners themselves, or they can rent it out, but one way or another they have to be capturing enough benefit from the actual use of the property. That breakeven occupancy rate then depends on things like the market rates for buying versus renting (with renting going up in real terms), interest rates, other property costs (also going up in real terms), assumptions about returns on diversified assets versus the one property, and so on.

And some people use their vacation properties a lot. Some people are willing to take on the burden of renting them out. And so on. So, this is not automatically a bad idea.

Still, we personally like a lot of variety in our vacations, and do not particularly want jobs as landlords. So that is a rather insurmountable problem, at least for now.

But if you are the type of person who actually likes going back to the same spot over and over, or you would actually enjoy running a little rental business of your own . . . that math could work out OK. At least if your financial plan would not be ruined if your property did poorly in terms of appreciation net of costs.
usnaron
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Re: Tales from this insane real estate market

Post by usnaron »

fishandgolf wrote: Mon May 16, 2022 9:18 pm I haven’t followed the rates lately…..what are the current mortgage rates for 15 and 30 year fixed?
For today, Tuesday, May 17, 2022, the current average 30-year fixed-mortgage rate is 5.42%, down 15 basis points from a week ago. If you're looking to refinance, the current average rate for a 30-year fixed refinance is 5.35%, declining 18 basis points over the last week.
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