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
stoptothink
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Re: Tales from this insane real estate market

Post by stoptothink »

rascott wrote: Wed Jun 15, 2022 4:08 pm
Leesbro63 wrote: Wed Jun 15, 2022 4:04 pm My adult kids are going to spend 2.5x their annual income to buy a McMansion in an Atlanta suburb. They have about 1/3 of the purchase price in cash to put down (old smaller home is paid for). Is this prudent? The dollar number (over $1M) seems shocking to me.
2.5x income seems prudent to me. The nominal dollar amount is kind of irrelevant. They'll come a day when we are all living in 7- figure homes. Sooner rather than later if the inflation beast isn't tamed.
We have family members who just put an offer on a home for $640k with a household income <$50k/yr. They do have $250k to put down (thanks to very recent inheritance), but that still leaves the mortgage at >8x income, not to mention they have horrific credit and a shocking debt/income ratio. They put an offer down without even a pre-approval, and I think their chances of getting approved for a mortgage are close to zero, so I don't think they'll be successful in getting anything (thank heavens).
pasadena
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Location: PNW

Re: Tales from this insane real estate market

Post by pasadena »

I live in a nice neighborhood made up of townhomes, built in the 80's. A couple of weeks ago, one went up for sale at $800k for 760sqf (2bd, 1bath). This was apparently roughly in line with the infamous Zestimate, but also the craziest price I've seen here. My reaction: 😲.

Well yesterday another one went up. 1320sqf, 2 bedrooms, 3 baths (Probably really 2 bathrooms and one toilet). For sale at $768k.

Still high, but not nearly as eye popping as the first one. So the first one reduced the price by $70k today. I'm expecting it to be further reduced in the coming weeks. Both homes have been recently renovated with similar finish quality. Same number of shared walls.

Sellers are still riding on the euphoria wave, but it seems that they're getting a reality check these days.
Firemenot
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Re: Tales from this insane real estate market

Post by Firemenot »

rascott wrote: Wed Jun 15, 2022 7:47 pm
newyorker wrote: Wed Jun 15, 2022 7:38 pm House has to drop... mortgage is 6.3 percent now.
Should bring demand more in line with supply.

Demand has been over the top insane. When you had 10+ buyers for every 1 seller.

I don't agree it "has to drop". It could just stall/flatline as the weakening demand brings us closer to a 1:1 ratio, rather than a 10:1.

I.E... house prices go up 0% in a 6-8% inflationary economy. That goes on for a few years then it brings everything back closer in- line.

Predicting the housing market is only a slightly lesser fool's game than predicting the stock market.
For prices to drop, a seller has to be willing to sell at a lower price. Most sellers will be anchored to peak valuations and simply won’t list their houses, and especially when they’re sitting on sweetheart interest rate mortgages. Perhaps enough people will HAVE to sell to drag down prices, but that’s no a sure thing.
YoungSisyphus
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Re: Tales from this insane real estate market

Post by YoungSisyphus »

Firemenot wrote: Thu Jun 16, 2022 3:25 pm
rascott wrote: Wed Jun 15, 2022 7:47 pm
newyorker wrote: Wed Jun 15, 2022 7:38 pm House has to drop... mortgage is 6.3 percent now.
Should bring demand more in line with supply.

Demand has been over the top insane. When you had 10+ buyers for every 1 seller.

I don't agree it "has to drop". It could just stall/flatline as the weakening demand brings us closer to a 1:1 ratio, rather than a 10:1.

I.E... house prices go up 0% in a 6-8% inflationary economy. That goes on for a few years then it brings everything back closer in- line.

Predicting the housing market is only a slightly lesser fool's game than predicting the stock market.
For prices to drop, a seller has to be willing to sell at a lower price. Most sellers will be anchored to peak valuations and simply won’t list their houses, and especially when they’re sitting on sweetheart interest rate mortgages. Perhaps enough people will HAVE to sell to drag down prices, but that’s no a sure thing.
Yeah, that’s what’s unrealistic to me - the only way will be if people are forced out due to foreclosures. It seems like being driven to sell due to job loss from a recession could drive sales - but even the. - at what price level? And I certainly don’t wish that to happen for anyone.

I feel stuck myself, in maybe a good way, have an old house purchased for $245k with estimate of over $400k now. The “stuck” part is I don’t want to have kids in this area, and so the prospect of having to buy into an inflated housing cost seems less than ideal. But I don’t really see how demand will die down so much that I could find a better home at a reasonable price.
ClassII
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Re: Tales from this insane real estate market

Post by ClassII »

YoungSisyphus wrote: Thu Jun 16, 2022 3:32 pmI feel stuck myself, in maybe a good way, have an old house purchased for $245k with estimate of over $400k now. The “stuck” part is I don’t want to have kids in this area, and so the prospect of having to buy into an inflated housing cost seems less than ideal. But I don’t really see how demand will die down so much that I could find a better home at a reasonable price.
I mean, you can buy an inflated new house using the funds from selling your inflated old house. Only thing you’d really be out is if you had a sweet mortgage rate. In the end for upgrading homeowners it’s a zero sum game as long as you’re not moving from HCOL>LCOL.

What you could do (not very Bogleheads) is wait for the market to cool, take the equity out via 2nd mortgage, HELOC and use that for the Dow payment. Rent the old place and sell at your convenience when the market goes up. Obviously only works if you want to be a landlord and the rent matches the expenses etc etc but that’s about the only way you can “play” the RE game regarding prices.
59Gibson
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Re: Tales from this insane real estate market

Post by 59Gibson »

Firemenot wrote: Thu Jun 16, 2022 3:25 pm
rascott wrote: Wed Jun 15, 2022 7:47 pm
newyorker wrote: Wed Jun 15, 2022 7:38 pm House has to drop... mortgage is 6.3 percent now.
Should bring demand more in line with supply.

Demand has been over the top insane. When you had 10+ buyers for every 1 seller.

I don't agree it "has to drop". It could just stall/flatline as the weakening demand brings us closer to a 1:1 ratio, rather than a 10:1.

I.E... house prices go up 0% in a 6-8% inflationary economy. That goes on for a few years then it brings everything back closer in- line.

Predicting the housing market is only a slightly lesser fool's game than predicting the stock market.
For prices to drop, a seller has to be willing to sell at a lower price. Most sellers will be anchored to peak valuations and simply won’t list their houses, and especially when they’re sitting on sweetheart interest rate mortgages. Perhaps enough people will HAVE to sell to drag down prices, but that’s no a sure thing.
For folks who want/need to sell, they''ll have to adjust. Either way more properties sitting longer will cause downward pressure just from the extra inventory and possibly fewer purchasers. But it is a slow grind
DiMAn0684
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Re: Tales from this insane real estate market

Post by DiMAn0684 »

YoungSisyphus wrote: Thu Jun 16, 2022 3:32 pm
Firemenot wrote: Thu Jun 16, 2022 3:25 pm
rascott wrote: Wed Jun 15, 2022 7:47 pm
newyorker wrote: Wed Jun 15, 2022 7:38 pm House has to drop... mortgage is 6.3 percent now.
Should bring demand more in line with supply.

Demand has been over the top insane. When you had 10+ buyers for every 1 seller.

I don't agree it "has to drop". It could just stall/flatline as the weakening demand brings us closer to a 1:1 ratio, rather than a 10:1.

I.E... house prices go up 0% in a 6-8% inflationary economy. That goes on for a few years then it brings everything back closer in- line.

Predicting the housing market is only a slightly lesser fool's game than predicting the stock market.
For prices to drop, a seller has to be willing to sell at a lower price. Most sellers will be anchored to peak valuations and simply won’t list their houses, and especially when they’re sitting on sweetheart interest rate mortgages. Perhaps enough people will HAVE to sell to drag down prices, but that’s no a sure thing.
Yeah, that’s what’s unrealistic to me - the only way will be if people are forced out due to foreclosures. It seems like being driven to sell due to job loss from a recession could drive sales - but even the. - at what price level? And I certainly don’t wish that to happen for anyone.

I feel stuck myself, in maybe a good way, have an old house purchased for $245k with estimate of over $400k now. The “stuck” part is I don’t want to have kids in this area, and so the prospect of having to buy into an inflated housing cost seems less than ideal. But I don’t really see how demand will die down so much that I could find a better home at a reasonable price.
You've answered your own question. People buy & sell when their life situations change. I imagine most people wouldn't be interested in being landlords even if they're locked into a low rate.
Nyc10036
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Re: Tales from this insane real estate market

Post by Nyc10036 »

I am looking to buy in a established 55+ community.
For a house to go on the market, the owner
dies
or
wants to downsize
or
wants to move closer to family elsewhere
or
needs to move to assisted living/nursing home

Right now, the houses on the market are priced at continued price increases of the past and they are sitting on the market longer compared to recent months.
59Gibson
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Re: Tales from this insane real estate market

Post by 59Gibson »

I've noticed much more inventory coming up for sale this past week. Mid/late June typically is a bit slower, people who are moving prefer to get everything done by August for schools, so it's usually March- May activity. Maybe FOMO and fear of recession??
dxwg2020
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Re: Tales from this insane real estate market

Post by dxwg2020 »

59Gibson wrote: Fri Jun 17, 2022 9:12 am I've noticed much more inventory coming up for sale this past week. Mid/late June typically is a bit slower, people who are moving prefer to get everything done by August for schools, so it's usually March- May activity. Maybe FOMO and fear of recession??
Yes, the St. Louis Fed data showed a spiking monthly supply of housing in April - highest in the past 10 years (relative to sale volume in the same month, though). See https://fred.stlouisfed.org/series/MSACSR. The footprint says: "The months' supply is the ratio of new houses for sale to new houses sold. This statistic provides an indication of the size of the new for-sale inventory in relation to the number of new houses currently being sold. The months' supply indicates how long the current new for-sale inventory would last given the current sales rate if no additional new houses were built."
rascott
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Re: Tales from this insane real estate market

Post by rascott »

dxwg2020 wrote: Fri Jun 17, 2022 9:54 am
59Gibson wrote: Fri Jun 17, 2022 9:12 am I've noticed much more inventory coming up for sale this past week. Mid/late June typically is a bit slower, people who are moving prefer to get everything done by August for schools, so it's usually March- May activity. Maybe FOMO and fear of recession??
Yes, the St. Louis Fed data showed a spiking monthly supply of housing in April - highest in the past 10 years (relative to sale volume in the same month, though). See https://fred.stlouisfed.org/series/MSACSR. The footprint says: "The months' supply is the ratio of new houses for sale to new houses sold. This statistic provides an indication of the size of the new for-sale inventory in relation to the number of new houses currently being sold. The months' supply indicates how long the current new for-sale inventory would last given the current sales rate if no additional new houses were built."

Yes new construction.... but that's less than 10% of the market. And new construction costs are at a pretty large premium over existing homes, right now. Feels like a lot of people are priced out of new construction. Unlike 2000-2006, there is little to no new construction in the starter home category.
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hiddenpower
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Re: Tales from this insane real estate market

Post by hiddenpower »

Interested in buying my first home this year. Potentially in another state. What platforms do you recommend to get started and keep tabs on areas? Do you just check zillow each day? Or is there a better site?

How do you go about buying out of town? Never done this before. A bit overwhelmed.
newyorker
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Re: Tales from this insane real estate market

Post by newyorker »

hiddenpower wrote: Fri Jun 17, 2022 1:31 pm Interested in buying my first home this year. Potentially in another state. What platforms do you recommend to get started and keep tabs on areas? Do you just check zillow each day? Or is there a better site?

How do you go about buying out of town? Never done this before. A bit overwhelmed.
I like realtor.com

And use redfin to buy. Save yourself few thousand bucks. Dont listen to regular realtors saying that they provide extra "value" LOL... value.. yeah right
DCChak
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Re: Tales from this insane real estate market

Post by DCChak »

runninginvestor wrote: Wed Jun 15, 2022 7:20 am
SteveJones wrote: Wed Jun 15, 2022 5:38 am I'd like to get comments on this thought:

Most buyers don't actually care about the total amount of money borrowed to buy a house. They base everything off of the monthly payment they will accrue. With that logic, is it reasonable to expect prices to drop to keep mortgage payments inline?
For non-cash buyers, it affects affordability. Every 1% increase in mortgage rates, they lose ~13% affordability. The kicker though is prices are sticky downwards so it may not be as fast of a decline. It works much more quickly - house prices rising - when rates drop.

I don't expect housing prices to drop in line with the rise in rates bc part of the issues with price increases are:
Cash buyers
Low supply
After reading this, I wondered, how many home buyers are cash buyers? Redfin notes that the overall percentage of cash buyers reached 30% in 2021. https://www.redfin.com/news/all-cash-ho ... all%20cash.
A prior peak of 34% came in 2014. Cash buying peaks seem to happen after strong stock market runs.

Also, the percentage of cash buyers varies widely by locality. Lots of retirees moving to FL ... more cash buyers. California evacuators selling high and buying low ... more cash buyers. Second home markets ... more cash buyers.
In West Palm Beach, FL, 52.6% of home purchases this year were paid for with all cash. That’s the largest share of the 86 metropolitan areas in this analysis. Metros must have had at least 3,000 home sales from January 2021 through April 2021 to be included in this report. Naples, FL came in second place, with 52.5% of home purchases so far this year using cash. It was followed by Nassau County, NY (50.2%), North Port, FL (49.4%), Port St. Lucie, FL (46.2%), Greenville, SC (45.4%), Palm Bay, FL (44.1%), Cape Coral, FL (44.1%), Des Moines, IA (41%) and Jacksonville, FL (40.1%).
Conversely, high priced markets found fewer cash buyers.
Expensive California metros, where it’s more challenging to pay with cash because home prices are relatively high, were at the bottom of the list. In both San Jose, CA and Oakland, CA, 12.5% of home purchases this year used all cash—the lowest share of the metros Redfin analyzed. Next came Richmond, VA (16%), Los Angeles (16%), San Diego (16.2%), Lake County, IL (17.2%), Sacramento, CA (17.7%), San Francisco (17.8%), Oxnard, CA (18%) and Bakersfield, CA (19.3%).
Carefreeap
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Re: Tales from this insane real estate market

Post by Carefreeap »

hiddenpower wrote: Fri Jun 17, 2022 1:31 pm Interested in buying my first home this year. Potentially in another state. What platforms do you recommend to get started and keep tabs on areas? Do you just check zillow each day? Or is there a better site?

How do you go about buying out of town? Never done this before. A bit overwhelmed.
I agree with Realtor.com.

Is this a company relocation? If so, generally the company will refer you an agency they have contracted with if you are eligible for relo benefits. Typically you also get a least one visit before the relo to do house hunting. I actually recommend a couple of trips if it's a larger metro area.
Every day I can hike is a good day.
professor_americus
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Re: Tales from this insane real estate market

Post by professor_americus »

Seattle eastside here. For first time I saw listing advertising seller-paid rate buydown. Interesting tactic. Plus price drop on original listing.
sandan
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Re: Tales from this insane real estate market

Post by sandan »

rascott wrote: Fri Jun 17, 2022 10:06 am
dxwg2020 wrote: Fri Jun 17, 2022 9:54 am
59Gibson wrote: Fri Jun 17, 2022 9:12 am I've noticed much more inventory coming up for sale this past week. Mid/late June typically is a bit slower, people who are moving prefer to get everything done by August for schools, so it's usually March- May activity. Maybe FOMO and fear of recession??
Yes, the St. Louis Fed data showed a spiking monthly supply of housing in April - highest in the past 10 years (relative to sale volume in the same month, though). See https://fred.stlouisfed.org/series/MSACSR. The footprint says: "The months' supply is the ratio of new houses for sale to new houses sold. This statistic provides an indication of the size of the new for-sale inventory in relation to the number of new houses currently being sold. The months' supply indicates how long the current new for-sale inventory would last given the current sales rate if no additional new houses were built."

Yes new construction.... but that's less than 10% of the market. And new construction costs are at a pretty large premium over existing homes, right now. Feels like a lot of people are priced out of new construction. Unlike 2000-2006, there is little to no new construction in the starter home category.
It depends on the location. The price of 10 year old homes are very close to new homes in many of the suburban markets that have seen a run up. I believe they are infact setting the local price in many cases.
junior
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Re: Tales from this insane real estate market

Post by junior »

newyorker wrote: Fri Jun 17, 2022 1:52 pm
hiddenpower wrote: Fri Jun 17, 2022 1:31 pm Interested in buying my first home this year. Potentially in another state. What platforms do you recommend to get started and keep tabs on areas? Do you just check zillow each day? Or is there a better site?

How do you go about buying out of town? Never done this before. A bit overwhelmed.
I like realtor.com

And use redfin to buy. Save yourself few thousand bucks. Dont listen to regular realtors saying that they provide extra "value" LOL... value.. yeah right
I think you only save money buying with Redfin in certain regions where home prices are high, so there's a enough money in it for Redfin to give you some back.
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changingtimes
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Re: Tales from this insane real estate market

Post by changingtimes »

hiddenpower wrote: Fri Jun 17, 2022 1:31 pm Interested in buying my first home this year. Potentially in another state. What platforms do you recommend to get started and keep tabs on areas? Do you just check zillow each day? Or is there a better site?

How do you go about buying out of town? Never done this before. A bit overwhelmed.
Once you settle on an area (or multiple areas), be sure to set searches to notify you as soon as new listings hit. With Zillow you can free-hand draw boundaries on the map and then include price ranges and other filters as part of a search.

Even if new listings aren't ones you are interested in bidding on, it can help you have a sense of what's out there, what's hitting, etc.

I had a realtor I was working with for a second home I just bought, and when I sent her the listing (she also sent me listings), she was at the house within three hours giving me a video tour. This can really help if you are venturing into what is a really hot market. (On the flip side, I've known this realtor for awhile - she helped me sell a house in this same area five years ago.)
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Watty
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Re: Tales from this insane real estate market

Post by Watty »

hiddenpower wrote: Fri Jun 17, 2022 1:31 pm Interested in buying my first home this year. Potentially in another state.
....
How do you go about buying out of town? Never done this before. A bit overwhelmed.
If at all possible I would highly recommend that you move there and rent someplace to live for at least six months so that you can make sure that you really want to live there, any new job is working out, and you can learn the area and the local housing market.

I have done a corporate relocation while I had a kid in school where I needed to fly into a city that I did not know and find a house to buy in two house hunting trips that were each a long weekend. Renting a place while we house hunted was not an option since we did not want our kid to have to change schools twice and the company relocation package was only good for a limited time.

It worked out OK but I am sure we could have done better if we had not been in such a hurry to buy.

A huge problem that we had was that lots of houses looked good online but when you were actually there they were not all that great when you saw them in person. With online house hunting you are likely overweighting the importance of curb appeal. For example we were moving to the southeast and some of the houses we liked online were great looking farmhouse style houses with a larger wrap around porch. When we saw them in person we realized they tended to be very dark inside because of the large porches and the rooms felt boxy. There are a lot of houses that might not have as much curb but are actually very nice houses.

The housing market was not crazy then and it was maybe just barely a buyers market. What we found was that even in a market like that when a really good house came on the market it would sell real quick when most houses were taking more like a month or two to sell. This meant when we flew into town there were only a few "really good" houses on the market that had just been listed and a lot of more average or below average houses that had been listed weeks or months ago but had not sold.

The best way to buy a house is if you can pick out the area you would want to live in or maybe even the subdivision or street that you would like to live in then sit back and wait and watch for a really good house in that location to come on the market. When a good one comes on the market you can snap it up quickly. It would be best if you can find a place to rent on a month to month lease so that you are not under any pressure to buy when your lease ends.
newyorker
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Re: Tales from this insane real estate market

Post by newyorker »

junior wrote: Fri Jun 17, 2022 3:13 pm
newyorker wrote: Fri Jun 17, 2022 1:52 pm
hiddenpower wrote: Fri Jun 17, 2022 1:31 pm Interested in buying my first home this year. Potentially in another state. What platforms do you recommend to get started and keep tabs on areas? Do you just check zillow each day? Or is there a better site?

How do you go about buying out of town? Never done this before. A bit overwhelmed.
I like realtor.com

And use redfin to buy. Save yourself few thousand bucks. Dont listen to regular realtors saying that they provide extra "value" LOL... value.. yeah right
I think you only save money buying with Redfin in certain regions where home prices are high, so there's a enough money in it for Redfin to give you some back.
No they always give you a few grand back. Its better than nothing and their realtors are actually pretty good. Ive used them and very happy.
SunnySideUp
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Re: Tales from this insane real estate market

Post by SunnySideUp »

hiddenpower wrote: Fri Jun 17, 2022 1:31 pm Interested in buying my first home this year. Potentially in another state.
We did this (bought (not-first) house in a different state) in mid-2020. I was employed at the time, but the move (which happened 3+ months after the house was purchased) was not employer caused or sponsored (in fact, it was a "stealth move" kept hidden from my employer until the last possible moment; I had been COVID-WFH for many months prior to (and after) the move, providing cover for this approach). The purpose was to depart a VHCOL mega-metro area for a MCOL-LCOL medium-small-town locale, with an eye toward likely upcoming involuntary FIRE (which happened 11 months thereafter).
hiddenpower wrote: Fri Jun 17, 2022 1:31 pm What platforms do you recommend to get started and keep tabs on areas? Do you just check zillow each day? Or is there a better site?
I became a Zillow addict a few years prior to this purchase; studying a wide range of candidate locales and getting a good feel for the target markets. http://www.city-data.com/ was a frequently-consulted resource as well. Google Maps and in particular Street View was a key resource allowing us to virtually "walk the neighborhood" as much as our hearts desired. This made our eventual onsite visits more like returning to familiar surroundings, vs. shocking novelty, allowed nuances to be noticed.
hiddenpower wrote: Fri Jun 17, 2022 1:31 pm How do you go about buying out of town? Never done this before. A bit overwhelmed.
We made 2 trips to the eventual target locale 2 years and 8 months prior to our purchase, to vet our choice of locale (and target neighborhoods), but not any particular property or agent.

Thereafter moving into the "active looking with intent to buy" phase, we partnered with a buyer's agent, with whom we never met face-to-face prior to our home purchase transaction taking place. I connected with this agent using a free service of the Dave Ramsay website (which I had read online-forum recommendations for; this aside, I have/had no past, present, or future affiliation with the Dave Ramsay org): they referred 2 agents, I interviewed both and chose one, who performed as well as I could have hoped. Our agent did many Zoom walkthroughs with us, which were at least 90% equivalent to "being there in person". Our purchase transpired while buyer inspection contingencies were still the norm, and we had a full suite of inspections done, with two seller-funded repairs performed as a result. We did win a (compared to later anecdotes) tiny bidding war. We used a mortgage broker recommended by our agent.

Looking back almost 2 years after the event, I think it went pretty well considering the degree of difficulty.
smalliebigs
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Re: Tales from this insane real estate market

Post by smalliebigs »

A week ago my neighbor 2 houses down put his house for sale for $550,000. 3 days later it was pending with the offer above the asking. I purchased mine (same size and year) back in 2017 for $350,000. Granted, it's not the largest increase I've seen on this forum, but the times are still good. Everyone in the subdivision is happy for him (and ourselves)
Leesbro63
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Re: Tales from this insane real estate market

Post by Leesbro63 »

smalliebigs wrote: Fri Jun 17, 2022 9:46 pm A week ago my neighbor 2 houses down put his house for sale for $550,000. 3 days later it was pending with the offer above the asking. I purchased mine (same size and year) back in 2017 for $350,000. Granted, it's not the largest increase I've seen on this forum, but the times are still good. Everyone in the subdivision is happy for him (and ourselves)
Except when the municipality reassesses the neighborhood for property tax purposes.
chazas
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Re: Tales from this insane real estate market

Post by chazas »

Leesbro63 wrote: Sat Jun 18, 2022 7:28 am
smalliebigs wrote: Fri Jun 17, 2022 9:46 pm A week ago my neighbor 2 houses down put his house for sale for $550,000. 3 days later it was pending with the offer above the asking. I purchased mine (same size and year) back in 2017 for $350,000. Granted, it's not the largest increase I've seen on this forum, but the times are still good. Everyone in the subdivision is happy for him (and ourselves)
Except when the municipality reassesses the neighborhood for property tax purposes.
Where I live they then lower the property tax rate so that the actual out-of-pocket increase is much smaller.
stoptothink
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Re: Tales from this insane real estate market

Post by stoptothink »

smalliebigs wrote: Fri Jun 17, 2022 9:46 pm A week ago my neighbor 2 houses down put his house for sale for $550,000. 3 days later it was pending with the offer above the asking. I purchased mine (same size and year) back in 2017 for $350,000. Granted, it's not the largest increase I've seen on this forum, but the times are still good. Everyone in the subdivision is happy for him (and ourselves)
Family members bought their condo in '18 for $181k, just went under contract this week for $419k. Now they think they can buy a SFH home in this market :oops:
smalliebigs
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Re: Tales from this insane real estate market

Post by smalliebigs »

stoptothink wrote: Sat Jun 18, 2022 7:49 am Family members bought their condo in '18 for $181k, just went under contract this week for $419k. Now they think they can buy a SFH home in this market :oops:
Obviously the housing prices for sale affect others, but definitely not them!
Grogs
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Re: Tales from this insane real estate market

Post by Grogs »

chazas wrote: Sat Jun 18, 2022 7:38 am
Leesbro63 wrote: Sat Jun 18, 2022 7:28 am
smalliebigs wrote: Fri Jun 17, 2022 9:46 pm A week ago my neighbor 2 houses down put his house for sale for $550,000. 3 days later it was pending with the offer above the asking. I purchased mine (same size and year) back in 2017 for $350,000. Granted, it's not the largest increase I've seen on this forum, but the times are still good. Everyone in the subdivision is happy for him (and ourselves)
Except when the municipality reassesses the neighborhood for property tax purposes.
Where I live they then lower the property tax rate so that the actual out-of-pocket increase is much smaller.
Same here. Apparently it's a state law to prevent 'stealth' property tax increases through assessments. In March I got a notice my assessment had gone up by 34%, but I found out that the average increase in our county was 40%. So my property tax next year should be about 1.34/1.4 = 95.7% of my current rate. Eventually I'm sure the county will get around to passing a millage rate increase, but that's a lot harder than just increasing the assessed values.
Leesbro63
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Re: Tales from this insane real estate market

Post by Leesbro63 »

chazas wrote: Sat Jun 18, 2022 7:38 am
Leesbro63 wrote: Sat Jun 18, 2022 7:28 am
smalliebigs wrote: Fri Jun 17, 2022 9:46 pm A week ago my neighbor 2 houses down put his house for sale for $550,000. 3 days later it was pending with the offer above the asking. I purchased mine (same size and year) back in 2017 for $350,000. Granted, it's not the largest increase I've seen on this forum, but the times are still good. Everyone in the subdivision is happy for him (and ourselves)
Except when the municipality reassesses the neighborhood for property tax purposes.
Where I live they then lower the property tax rate so that the actual out-of-pocket increase is much smaller.
Allegedly they do that here (Pittsburgh area) too. My experience has been that the overall effect still results in higher taxes.
sandan
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Re: Tales from this insane real estate market

Post by sandan »

stoptothink wrote: Sat Jun 18, 2022 7:49 am
smalliebigs wrote: Fri Jun 17, 2022 9:46 pm A week ago my neighbor 2 houses down put his house for sale for $550,000. 3 days later it was pending with the offer above the asking. I purchased mine (same size and year) back in 2017 for $350,000. Granted, it's not the largest increase I've seen on this forum, but the times are still good. Everyone in the subdivision is happy for him (and ourselves)
Family members bought their condo in '18 for $181k, just went under contract this week for $419k. Now they think they can buy a SFH home in this market :oops:
I seem to know a few people that upgraded this way or flat out decided to buy a new home to live in plus a rental or vacation home.
DRReaders
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Re: Tales from this insane real estate market

Post by DRReaders »

I put my house on the market at the beginning of this month at $416k with a Zestimate of $436k. An identical house (exact same layout, slightly smaller lot size) down the street has been up for 36 days at $432k. I've only received one offer which was a FHA at $425k, but they were asking for me to replace the entire HVAC system for $20k.

Feels like the market has slowed down a lot since a few months ago since from what I can tell, my house is valued at slightly lower than comparable houses in the area and in an excellent location (one block from a large park and walking distance to schools). DFW area for reference.
Bcdkgf
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Re: Tales from this insane real estate market

Post by Bcdkgf »

DRReaders wrote: Mon Jun 20, 2022 9:13 am I put my house on the market at the beginning of this month at $416k with a Zestimate of $436k. An identical house (exact same layout, slightly smaller lot size) down the street has been up for 36 days at $432k. I've only received one offer which was a FHA at $425k, but they were asking for me to replace the entire HVAC system for $20k.

Feels like the market has slowed down a lot since a few months ago since from what I can tell, my house is valued at slightly lower than comparable houses in the area and in an excellent location (one block from a large park and walking distance to schools). DFW area for reference.
I am puzzled, if you spent the money to replace the HVAC, what happens if the closing doesn't take place?
Women and men plan, the Gods laugh.
Leesbro63
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Re: Tales from this insane real estate market

Post by Leesbro63 »

Bcdkgf wrote: Mon Jun 20, 2022 10:06 am
DRReaders wrote: Mon Jun 20, 2022 9:13 am I put my house on the market at the beginning of this month at $416k with a Zestimate of $436k. An identical house (exact same layout, slightly smaller lot size) down the street has been up for 36 days at $432k. I've only received one offer which was a FHA at $425k, but they were asking for me to replace the entire HVAC system for $20k.

Feels like the market has slowed down a lot since a few months ago since from what I can tell, my house is valued at slightly lower than comparable houses in the area and in an excellent location (one block from a large park and walking distance to schools). DFW area for reference.
I am puzzled, if you spent the money to replace the HVAC, what happens if the closing doesn't take place?
I'd never do this. What I'd counter offer, if I decided that their request to have the HVAC replaced was one I'd do, is to rebate money at the closing (if they need the cash) or give a credit against the purchase price (if they don't need the cash). This way THEY contract with the HVAC company and deal with any installation issues and warranty/after-install issues.
DRReaders
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Re: Tales from this insane real estate market

Post by DRReaders »

Bcdkgf wrote: Mon Jun 20, 2022 10:06 am I am puzzled, if you spent the money to replace the HVAC, what happens if the closing doesn't take place?
In that case I'd assume I would keep the earnest money. In any case, I told them I wouldn't be replacing an old but working HVAC system.
DRReaders
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Re: Tales from this insane real estate market

Post by DRReaders »

Leesbro63 wrote: Mon Jun 20, 2022 10:08 am I'd never do this. What I'd counter offer, if I decided that their request to have the HVAC replaced was one I'd do, is to rebate money at the closing (if they need the cash) or give a credit against the purchase price (if they don't need the cash). This way THEY contract with the HVAC company and deal with any installation issues and warranty/after-install issues.
Unfortunately, they were adamant that I completely replace the HVAC system. I gave them several other options such as replacing 1 of the 2 older units, splitting the cost, or giving them a credit. In the end, I turned down the offer.
Globetrttr
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Re: Tales from this insane real estate market

Post by Globetrttr »

We just moved back in May after searching for 3 months and offering on a dozen properties, being outbid by amounts ranging from 10-30% over asking. We had waived our home sale contingency, appraisal contingency (offered some gap coverage) and finance contingency (commitment letter from lender) but our offers were still being tossed in the bin in favor of others who simply offered way more in pure cash, waived inspections, appraisals, etc. The market felt like a mosh pit at the front of a heavy-metal concert - absolutely no respect from some agents or buyers who barged in on our showings.

The home that found us met the most important of our requirements: schools, proximity to work, price within budget, well-maintained condition, tidy neighborhood/HOA. It does look like a much different type of house than we thought we could afford 12 months ago.

Old house went under contract in a weekend in early May. New buyers had a long list of petty demands taken from their inspector's report - we mostly ignored. Closed a few weeks ago and more than doubled our investment in 6 years.

We're happy and I sleep better at night knowing it's an affordable home if one of us loses our job tomorrow, and the kids have one of the best public school paths in the state, which was our main reason for moving. If property values crash or stagnate for a decade, it won't matter since our plan is to stay put long enough to get the kids into college (20 years +/-2) then leave metro ATL for good (another topic completely).

This process behind us now, it is interesting to see how the interest rates have killed off much of the asinine behavior that we had to deal with just 3 months ago.
Only when the tide goes out do you discover who's been swimming naked. - W. Buffett
Bigt3142
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Re: Tales from this insane real estate market

Post by Bigt3142 »

Prices on new houses in my subdivision were lowered $45,000 on Friday or about 5%, after having gone up 37% since we purchased ours. They have 11 houses that are in various stages of completion available. When I bought last year there were 35 houses listed in our market, now there's 300. Things have definitely turned with the raise in interest rates.
phxjcc
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Re: Tales from this insane real estate market

Post by phxjcc »

Observations a/o today.

1. Market Specific Sales
Palm Springs, CA: the under $1.5 mil. market has slowed considerably for the last 45 days. Houses that would have sold in 1 week are now still available. Surprisingly, the rest of the Coachella Valley remains fast moving under $1.0 mill.
Central Coast: same as above. But inventory remains low.
NE Scottsdale, AZ:
Same as above, but the break-point for the fast movers vs. slower movers has shifted from 1.75 mil downward to 1.5 mil, maybe lower.
Suspect interest rate impact.

2. STVR Activity
Summer bookings have considerably, back to pre-COVID levels.
Suspect more people are traveling further and wider.
Bookings for fall and winter/spring 2023 remain strong.
Last edited by phxjcc on Mon Jun 20, 2022 11:01 am, edited 1 time in total.
Globetrttr
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Re: Tales from this insane real estate market

Post by Globetrttr »

DRReaders wrote: Mon Jun 20, 2022 10:28 am
Unfortunately, they were adamant that I completely replace the HVAC system. I gave them several other options such as replacing 1 of the 2 older units, splitting the cost, or giving them a credit. In the end, I turned down the offer.
I think the most value that buyers find is when you offer credit towards closing cost. It's instant cash in their pocket and they can do what they want with it.
Only when the tide goes out do you discover who's been swimming naked. - W. Buffett
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deanbrew
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Re: Tales from this insane real estate market

Post by deanbrew »

Globetrttr wrote: Mon Jun 20, 2022 11:01 am
DRReaders wrote: Mon Jun 20, 2022 10:28 am
Unfortunately, they were adamant that I completely replace the HVAC system. I gave them several other options such as replacing 1 of the 2 older units, splitting the cost, or giving them a credit. In the end, I turned down the offer.
I think the most value that buyers find is when you offer credit towards closing cost. It's instant cash in their pocket and they can do what they want with it.
I agree. Easiest way to handle issues that pop up during the due diligence / home inspection period.
"The course of history shows that as the government grows, liberty decreases." Thomas Jefferson
Bcdkgf
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Re: Tales from this insane real estate market

Post by Bcdkgf »

deanbrew wrote: Mon Jun 20, 2022 11:45 am
Globetrttr wrote: Mon Jun 20, 2022 11:01 am
DRReaders wrote: Mon Jun 20, 2022 10:28 am
Unfortunately, they were adamant that I completely replace the HVAC system. I gave them several other options such as replacing 1 of the 2 older units, splitting the cost, or giving them a credit. In the end, I turned down the offer.
I think the most value that buyers find is when you offer credit towards closing cost. It's instant cash in their pocket and they can do what they want with it.
I agree. Easiest way to handle issues that pop up during the due diligence / home inspection period.
We gave our buyers (End of last August) a home warranty for their petty demands and only fixed one problem ourselves, a very slightly loose connection under the sink, that only needed hand tightening.
Women and men plan, the Gods laugh.
MrsRoos
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Re: Tales from this insane real estate market

Post by MrsRoos »

hiddenpower wrote: Fri Jun 17, 2022 1:31 pm Interested in buying my first home this year. Potentially in another state. What platforms do you recommend to get started and keep tabs on areas? Do you just check zillow each day? Or is there a better site?

How do you go about buying out of town? Never done this before. A bit overwhelmed.
We setup Redfin to send us new listings as soon as it's online. When we see a property we like, we forward it to our local realtor who will then set up a showing and send us the MLS listing. I highly recommend getting yourself a local realtor who is knowledgeable about the area and who is willing to FaceTime for showings. It took us awhile and >10 showings, but eventually was able to purchase an off-market property (connection was through a friend of a friend) but decided that we were going to pay our realtor the 2% fee anyway to help us with the RE transaction since we are out of town buyers and she's helped us so much along the way.
“Anyone who believes in indefinite growth in anything physical, on a physically finite planet, is either mad or an economist.” - Kenneth Boulding
Valuethinker
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Re: Tales from this insane real estate market

Post by Valuethinker »

Globetrttr wrote: Mon Jun 20, 2022 10:47 am

This process behind us now, it is interesting to see how the interest rates have killed off much of the asinine behavior that we had to deal with just 3 months ago.
1. US population growth is sharply lower than it was 2000-10, I believe

2. however Millennials are in the peak home buying years, and are late to this party (for all the reasons discussed in many outlets), so demand for new homes is likely to continue especially in well located suburban locations (that's what each generation does when it reaches an age where children are a consideration etc).

The need for Boomers to trade down/ release equity (and eventually die) means that there will be fairly steady supplies of old homes. However my parent is still in the family home at 90+ so this can be a very long term thing (first Boomer turns 90 in 2035).

(One thing I have become aware of is the condominium maintenance problem. Many 30+ year old condos appear to be underprovisioned for expensive repairs and restoration. That is going to disrupt the market).

3. supply is still quite constrained by shortages of materials & labour. That's an ongoing theme. Housing starts in the last 3 years haven't gone anywhere near meeting net demand.

This implies to me that indeed the US markets will weaken but they won't crater - although there are certainly local "bubbles".

4. of course this depends on what the Fed does & mortgage rate moves from here

5. Calculated Risk blog & newsletter are indispensable for anyone tracking US housing and construction markets.
irr
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Re: Tales from this insane real estate market

Post by irr »

Valuethinker wrote: Tue Jun 21, 2022 5:50 am
Globetrttr wrote: Mon Jun 20, 2022 10:47 am

This process behind us now, it is interesting to see how the interest rates have killed off much of the asinine behavior that we had to deal with just 3 months ago.
1. US population growth is sharply lower than it was 2000-10, I believe

2. however Millennials are in the peak home buying years, and are late to this party (for all the reasons discussed in many outlets), so demand for new homes is likely to continue especially in well located suburban locations (that's what each generation does when it reaches an age where children are a consideration etc).

The need for Boomers to trade down/ release equity (and eventually die) means that there will be fairly steady supplies of old homes. However my parent is still in the family home at 90+ so this can be a very long term thing (first Boomer turns 90 in 2035).

(One thing I have become aware of is the condominium maintenance problem. Many 30+ year old condos appear to be underprovisioned for expensive repairs and restoration. That is going to disrupt the market).

3. supply is still quite constrained by shortages of materials & labour. That's an ongoing theme. Housing starts in the last 3 years haven't gone anywhere near meeting net demand.

This implies to me that indeed the US markets will weaken but they won't crater - although there are certainly local "bubbles".

4. of course this depends on what the Fed does & mortgage rate moves from here

5. Calculated Risk blog & newsletter are indispensable for anyone tracking US housing and construction markets.
You hit the nail on the head. The only thing I'd mention is that more people are aging in place and delaying selling their home.

Calculated Risk is fantastic. I'd also include Altos Research if you're a data nerd or investing in real estate in any capacity.
Real estate, where even the most mediocre can become wealthy.
AZAttorney11
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Re: Tales from this insane real estate market

Post by AZAttorney11 »

phxjcc wrote: Mon Jun 20, 2022 10:59 am Observations a/o today.

1. Market Specific Sales
Palm Springs, CA: the under $1.5 mil. market has slowed considerably for the last 45 days. Houses that would have sold in 1 week are now still available. Surprisingly, the rest of the Coachella Valley remains fast moving under $1.0 mill.
Central Coast: same as above. But inventory remains low.
NE Scottsdale, AZ:
Same as above, but the break-point for the fast movers vs. slower movers has shifted from 1.75 mil downward to 1.5 mil, maybe lower.
Suspect interest rate impact.

2. STVR Activity
Summer bookings have considerably, back to pre-COVID levels.
Suspect more people are traveling further and wider.
Bookings for fall and winter/spring 2023 remain strong.
I follow homes in NE Scottsdale, North Scottsdale, Desert Ridge, Cave Creek, some of the nicer areas in Central Phoenix and Paradise Valley. Generally speaking, I'm seeing more inventory and price reductions. Homes are definitely sitting longer in the $1mm+ range.
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HomerJ
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Re: Tales from this insane real estate market

Post by HomerJ »

AZAttorney11 wrote: Tue Jun 21, 2022 5:58 pm
phxjcc wrote: Mon Jun 20, 2022 10:59 am Observations a/o today.

1. Market Specific Sales
Palm Springs, CA: the under $1.5 mil. market has slowed considerably for the last 45 days. Houses that would have sold in 1 week are now still available. Surprisingly, the rest of the Coachella Valley remains fast moving under $1.0 mill.
Central Coast: same as above. But inventory remains low.
NE Scottsdale, AZ:
Same as above, but the break-point for the fast movers vs. slower movers has shifted from 1.75 mil downward to 1.5 mil, maybe lower.
Suspect interest rate impact.

2. STVR Activity
Summer bookings have considerably, back to pre-COVID levels.
Suspect more people are traveling further and wider.
Bookings for fall and winter/spring 2023 remain strong.
I follow homes in NE Scottsdale, North Scottsdale, Desert Ridge, Cave Creek, some of the nicer areas in Central Phoenix and Paradise Valley. Generally speaking, I'm seeing more inventory and price reductions. Homes are definitely sitting longer in the $1mm+ range.
I'm in SE Phoenix... Queens Creek, San Tan Valley... seeing the same thing. Over $1 million is taking longer to sell... but still selling so far...
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
Carefreeap
Posts: 3310
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Location: SF Bay Area

Re: Tales from this insane real estate market

Post by Carefreeap »

AZAttorney11 wrote: Tue Jun 21, 2022 5:58 pm
phxjcc wrote: Mon Jun 20, 2022 10:59 am Observations a/o today.

1. Market Specific Sales
Palm Springs, CA: the under $1.5 mil. market has slowed considerably for the last 45 days. Houses that would have sold in 1 week are now still available. Surprisingly, the rest of the Coachella Valley remains fast moving under $1.0 mill.
Central Coast: same as above. But inventory remains low.
NE Scottsdale, AZ:
Same as above, but the break-point for the fast movers vs. slower movers has shifted from 1.75 mil downward to 1.5 mil, maybe lower.
Suspect interest rate impact.

2. STVR Activity
Summer bookings have considerably, back to pre-COVID levels.
Suspect more people are traveling further and wider.
Bookings for fall and winter/spring 2023 remain strong.
I follow homes in NE Scottsdale, North Scottsdale, Desert Ridge, Cave Creek, some of the nicer areas in Central Phoenix and Paradise Valley. Generally speaking, I'm seeing more inventory and price reductions. Homes are definitely sitting longer in the $1mm+ range.
I'm not disagreeing with either one of you but want to point out that there is definitely a "season" to a lot of these areas. I'm still flabergasted at what appears to be the value of my AZ home...

But we've seen this before. We first purchased our AZ home in 2003 for $475k, watched it swell up to just under $1M in 2007 and then blow out to about $450k 2008-2012. Now it's worth about $1.5M but I expect we'll see another hard correction. Unlike the SF Bay Area where I live, the greater Phoenix area still has plenty of land and land use policies which encourage more building.
Last edited by Carefreeap on Fri Jun 24, 2022 10:09 am, edited 1 time in total.
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traveling_salesman
Posts: 124
Joined: Mon Apr 26, 2010 12:13 am

Re: Tales from this insane real estate market

Post by traveling_salesman »

A lot of good posts here from people very much in the know. I wonder if anyone has any insight into the Atlanta ITP market? (Definitely sub-million range...)
RoadThunder
Posts: 102
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Re: Tales from this insane real estate market

Post by RoadThunder »

The 2008 meltdown took till 2011 for the housing market to totally crater. The current situation is fundamentally different as most mortgages are ultimately backed by the .gov and not held by local banks. Further, we have overall shortage of family housing along with lack of skilled trade. It potentially could take years (many) for .gov to move on bad mortgages and deadbeat homeowners. After 2008, local banks simply became commission sales people for .gov back mortgages.
phxjcc
Posts: 1281
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Re: Tales from this insane real estate market

Post by phxjcc »

Carefreeap wrote: Wed Jun 22, 2022 11:34 am
AZAttorney11 wrote: Tue Jun 21, 2022 5:58 pm
phxjcc wrote: Mon Jun 20, 2022 10:59 am Observations a/o today.

1. Market Specific Sales
Palm Springs, CA: the under $1.5 mil. market has slowed considerably for the last 45 days. Houses that would have sold in 1 week are now still available. Surprisingly, the rest of the Coachella Valley remains fast moving under $1.0 mill.
Central Coast: same as above. But inventory remains low.
NE Scottsdale, AZ:
Same as above, but the break-point for the fast movers vs. slower movers has shifted from 1.75 mil downward to 1.5 mil, maybe lower.
Suspect interest rate impact.

2. STVR Activity
Summer bookings have considerably, back to pre-COVID levels.
Suspect more people are traveling further and wider.
Bookings for fall and winter/spring 2023 remain strong.
I follow homes in NE Scottsdale, North Scottsdale, Desert Ridge, Cave Creek, some of the nicer areas in Central Phoenix and Paradise Valley. Generally speaking, I'm seeing more inventory and price reductions. Homes are definitely sitting longer in the $1mm+ range.
I'm not disagreeing with either one of you but want to point out that there is definitely a "season" to a lot of these areas. I'm still flabergasted at what appears to be the value of my AZ home...

But we've seen this before. We first purchased our AZ home in 2008 for $475k, watched it swell up to just under $1M in 2007 and then blow out to about $450k 2008-2012. Now it's worth about $1.5M but I expect we'll see another hard correction. Unlike the SF Bay Area where I live, the greater Phoenix area still has plenty of land and land use policies which encourage more building.
Agreed; market swings in AZ are wild.
Scottsdale
$288 in 1998
$1.2 in 2004
$600 in 2009
$1.5 in 2021
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