Home prices getting interesting, what price are homes in your neighborhood?

[ExFlyBoy5]

My DW (works in the SFH rental business) noted this weekend that the rental "rent ranges" she comes up with have been way out to lunch. Basically, she will do an analysis of current rents of comparable properties and then forecast upcoming lease renewals/acceptable rent amount for VC firms and large investment firms. The ranges she has calculated are coming up woefully low for what the ACTUAL rents are, and Zillow is apparently way out of whack too. This is true for several large and not-so-large markets. There are some markets that are absolutely on fire but you don't hear too much about in the news...such as Birmingham, AL. DW says she is busier with that area than the metro ATL area. So, the craziness continues!

 

[tmm99]

The cost to build a house is still really high so that will have some effect on supporting these higher prices.


A 2x6x8 is about $15 (it had dropped to $7 last November)

A sheet of 1/2" OSB sheathing, what used to be one of the cheapest building materials, is at $52! This is essentially a $6 sheet of pressed wood chips being sold for 8 to 9 times that price now.

Copper is way up (wiring). Labor is up somewhat.

Any moderate size house now being sold for under $200k is being sold below cost.

I read on the news last year (Ontario news) that a woman had put a deposit down for a condo (around $500K CAD?) that was being built, and several months into the project, their developer told them that they needed an additional $100K as the cost of raw materials had skyrocketed. It was either that, or the developer would cancel the contract and give her their deposit back. She was devastated as she didn't have another $100K. It's possible that this particular builder was taking advantage of the rising market as well, so I don't know if $100K was a fair number, but the fact remains that the rising cost of raw materials will inevitably raise the cost of any building projects.

 

[Fermion]

Probably location location location has never been more important than now if you want to build a new house and break even.

Where we are building, the house prices are not insane although they have gone up 30% or so in the past two years. Since the building materials have gone up at least that much, it is very hard to build a spec house in this area and know you are going to make money.

I know if I were a builder, I would only want to build in some place like Seattle or San Fran where the materials cost was a small fraction of the sale price.

I can't see anyone building in some place like south Georgia, unless they just go with a manufactured home.

 

[lajolla]

Our townhouse is paid off and we are 2.5 miles from the beach here in San Diego. We don't have any places currently on the market in our development, but the ones that have been sold in the past few months have gone for $1.25 million. There are multiple offers and they normally are only on the market for a week at the most.

 

[Aerides]

In our hood, Zillow is spot on. We bought our house 25 years ago for 20% of it's current value.

In ours, it's at about 20% behind current listings and recent sales, particularly activity since the start of the year. I don't know how realtor comp data works in detail, but anything from 2021 is old news at this point. Prices for homes that sold here in 4Q21 now look like bargains.

 

[laurence]

Still insane in my neck of the woods. This is our starter home neighborhood, we moved to an area of the same city with better schools and amenities. These are KB homes with relatively low end build quality:

https://www.sdlookup.com/MLS-NDP2201451-730_Via_Barquero_San_Marcos_CA_92069

They are now literally blowing up hillsides with dynamite down the street from me to fit in more tri-level townhomes. My buddy is in the mortgage business (he funds loans for brokers) and says it's not like 2006 because there aren't 125% loan to value, negative amortization, stated income loans anymore but that it's still going to be bad, in his opinion. People are getting creative/desperate to get that dream home...

 

[TrvlBug]

In ours, it's at about 20% behind current listings and recent sales, particularly activity since the start of the year. I don't know how realtor comp data works in detail, but anything from 2021 is old news at this point. Prices for homes that sold here in 4Q21 now look like bargains.

You're right, I would suspect there is a lag.

 

[GTFan]

They are now literally blowing up hillsides with dynamite down the street from me to fit in more tri-level townhomes.

That's interesting, most of the new construction we're seeing here is also townhomes (two-level, not tri). And from briefly talking to a local carpenter most of them are being thrown up fast with low quality, he's going back to fix stuff on the regular 2-3 years after they're sold.

 

[statsman]

Our kid wasn't sure about buying a house. Felt prices might come down. We said sure, but that would likely mean interest rates would go through the roof.

Bid on a house before Thanksgiving last year, and closed by the end of 2021. House is already valued 8-10% higher than what they purchased it for based on recent sales in that part of town. The house across the street just sold, with one of those "coming soon" situations described in this thread. Never got to the open house stage.

The value of the house may go down, but they are locked in right now at 3% for a 30-year mortgage. I'm not sure we're going to see low mortgages like that for a while.