Is the realestate bubble bursting?

Here's data:

https://fred.stlouisfed.org/series/MEDDAYONMARUS#

Those are days from listing to close, so time to close throws a variable in there. According to that, recent months were the 'hottest'. I would have thought things were hotter 12~18 months ago (we were buying/selling early 2021, and things were crazy - our house never even got listed, we had a buyer just about begging for our house).

-ERD50
 
Even with higher mortgage rates, there is still a housing shortage in many areas of the country. The estimate I heard is that we need about 4,000,000 more housing units than we have now. I assume that means single family houses, condos, and apartments. So, while I can see some weakening in the market, it's hard to see a crash or even a sustained price drop. Besides, all those folks with 2.4% mortgages are not gong to be anxious to sell and 'buy up' at today's higher rates.

By keeping mortgage rates artificially low when compared with inflation, the FED has created a market distortion that will be with us for many years, perhaps well over a decade. In the meantime, out in my area, governments continue to find reasons to drive up housing prices by requiring all sorts of 'good things' be done when building houses, condominiums and apartments. My 2¢.
 
Little bit interesting, I closed my last property in the hood last week. It's a SF 3BR 1 bath with a 25 year tenant "Grandma". Buyer had to be an investor as Grandma came with it.

A young kid put up 20% and waived the home inspection ... cha-ching it sold in a week. Come to find out (at closing) the buyer got a 7.25% loan and will have a $400-500 NEGATIVE cash flow per month after collecting the Section 8 rents.

Negative cash flow has always been a sure-tale sign of a peaking market.
 
tryan said:
Little bit interesting, I closed my last property in the hood last week. It's a SF 3BR 1 bath with a 25 year tenant "Grandma". Buyer had to be an investor as Grandma came with it.

A young kid put up 20% and waived the home inspection ... cha-ching it sold in a week. Come to find out (at closing) the buyer got a 7.25% loan and will have a $400-500 NEGATIVE cash flow per month after collecting the Section 8 rents.

Negative cash flow has always been a sure-tale sign of a peaking market.
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Sounds like that young buyer fell victim of FOMO. Might be learning a hard lesson over the coming months.
 
I saw an interesting video this morning that was made by a local realtor in our area (a resort town in CO). He noted the multiple price reductions happening in our area and attributed it to sellers still thinking that they could increase prices 15%-20 over LY, just like had been done the two previous years. He said the properties should be about 4-5% YOY.

We're seeing pendings hit when properties reach about that number/sq ft so I think he's right about the current conditions. I actually expect our area to end up flat by year-end.

Yup, I bought in February at the peak, but the house was so perfect for us that we couldn't help but overpay. In our small town there is only so much available so the best houses still demand a premium. The rest are reverting back to more reasonable valuations.
 
I'm seeing some modest price reductions in our neighborhood, although nothing near pre-pandemic levels. A few of the homes are sitting. The house on the corner of our block (which was purchased towards the latter part of 2019) is in foreclosure. It has not been updated, is empty, and appears to be a bit overpriced. I have to wonder if the owner stopped making payments during the foreclosure moratorium, and the bank is trying to recover lost interest. We'll see how it does.
 
REWahoo said:
Things have definitely slowed here in my zip. Over the past few years there have consistently been 8 -14 single family homes for sale on Realtor.com and typically two or three of those showed "pending". The number of listings is slowly creeping up, currently at 19, and only one of those is pending.
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Updating the above from last month, there are now 24 houses for sale in our zip and none show a sales pending. Five of the 24 have reduced prices, although by only a token amount ($5k to $15k). Three of the 24 have been on the market for a year or more and two others for more than six months. Most definitely a slowdown.
 
Home prices are still pretty high in our Bay Area suburb but down from the peak. With tech layoffs starting and mortgage rates still high, this could be the start of a bubble popping here. Our house was down $100K from a couple of months ago. But that's okay, it went up $100K around 4 months ago. Easy come, easy go.
 
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Thankfully in our case prices were still holding up on farm land.

Offer was accepted in June.

Glad to be past that though, whew!
 
Retired last year and looking to relocate out of Northern Virginia. Thinking of purchasing new construction so new house wouldnt't be ready until next Spring/Summer 2023. Should I sell house now or wait until next Spring to put house on the market. Have a place to stay if I decide to sell now. Any advice?
 
IF I was in that situation and wanted to build and had a place to stay during construction I may want to sell the house while the market is still hot. Whether you sell or not the cost of construction will probably not change much during the year but the selling price of your house may go down a bit.
What will be your financial obligation for the place you will stay?
I would also consider locating yourself near the new house construction so you can keep your eyes on the construction process daily. Shortcuts will be taken and inferior materials will be used if you don't. Make sure your contract is specific regarding materials and timeline.
If I stepped on any toes then you are in a very small minority of builders so disregard the caveat. Many other builders will try to get away with as much as they can knowing you probably won't find out until it is too late. My experience and that of many others is that most people will take advantage of you if they can.

Cheers!
 
jgman said:
Retired last year and looking to relocate out of Northern Virginia. Thinking of purchasing new construction so new house wouldnt't be ready until next Spring/Summer 2023. Should I sell house now or wait until next Spring to put house on the market. Have a place to stay if I decide to sell now. Any advice?
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If I had a place to stay, I would sell now.
 

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The above are percentage increases in inventory.

I would think it better to compare actual numbers of homes on the market compared to historical numbers. I would also like to how permits for new units are doing?

I suspect there is still a substantial shortage of affordable units In many areas.
 
Chuckanut said:
The above are percentage increases in inventory.

I would think it better to compare actual numbers of homes on the market compared to historical numbers. I would also like to how permits for new units are doing?

I suspect there is still a substantial shortage of affordable units In many areas.
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Feel free to analyze the data at Realtor.com: https://www.realtor.com/research/data/

Thanks in advance for sharing your findings here.

ETA: Since I'm back teaching a full course load PLUS extra classes (Computer Science), i.e. that four letter word called w*rk and desperately trying to get a bunch of outside projects done before winter arrives here in the northeast, my time to play with Realtor's data is essentially zero. However, if I somehow get bored I will play with the data.
 
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I own (3) rental units

So far, I'd say noticeably softer but not even close to crash or burst - at least not today.

Metro Atlanta I have a few 3bed/2bath townhomes and thus far knock on woods rents are coming in fine.

1 unit I paid $248k for 1 year ago. Since then there was a time I could sell it for $330k and it was a no brainer. TODAY I see identical units in the complex - asking $334k - and still on market after 3 weeks. My sense is that I'd have to be around $305-310k to sell today.

Rehab homes - I keep wanting to do my first but I'm 0/5 on offers. Seems to still be investor enthusiasm out there and I'm not the only cash buyer. The last one - I lost to someone who offered $5,000 LESS than me - but he waived all due diligence. I found out he's a General Contractor - - oh well I can't waive the diligence. I don't want my first rehab being some nasty surprise with the foundation or flooding or whatever.

There's a 3bed/1bath SF home - asking $219k - 11 days. I offered $195k cash but after 24 hours we've heard no reply.

If I could do just 1 rehab a year at a humble profit it would be such a boon to my overall plan. Frustrating I've not been able to buy one so far.
 
In our development of around 600 homes. (Gated Golf CC Community) there are 5 homes for sale between $750k and $1.5m, all are in the less desirable older sections, one of which has a flooding history. They tend to stay on the market longer. Any home in our development older than 2000 (Pre-Plastic Water Pipes) or with a wood frame tend to take longer to sell and are not being snapped up as they were earlier this year. Insurance for pre 2000 and Wood homes cost roughly double to insure that does not help. According to local realtors 95% of purchases are usually all cash, so I do not think Mortgage rates are as much of a reason. All are walking distance or a short cycle to the beach.
 
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MichealKnight said:
oh well I can't waive the diligence.
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Stick to that. My son bought his first home last year and after losing 4 bids became desperate and waived all diligence. Even though the home was only 3 years old, it still required about $10k of work, including a relatively minor foundation repair. He also paid 12% over asking price in an already very expensive market (desirable Seattle suburb). I’m glad they found a home in a great area, but I’m not thrilled with the amount of debt he took on.
 
thanks for sharing

TripleLindy said:
Stick to that. My son bought his first home last year and after losing 4 bids became desperate and waived all diligence. Even though the home was only 3 years old, it still required about $10k of work, including a relatively minor foundation repair. He also paid 12% over asking price in an already very expensive market (desirable Seattle suburb). I’m glad they found a home in a great area, but I’m not thrilled with the amount of debt he took on.
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Sorry that this was your son's first home experience -- but as you said at least it's in a good area and while the 10k stings - it could have been worse.

I'm going into rehabbing very eyes open - I realize I'm a total rookie. I realize therefore I'll be ceding some profit margin because I probably won't fish out the best deals, and odds are I'll pay a bit more for the rehab work due to lack of knowledge. But gotta start somewhere. Bring very conservative - and luckily the broker/property manager I have a good relationship with is equally conservative and I suspect that's why i'v e probably missed on a few -- but yeah, I'll keep the diligence clauses on my offers.

Some days I feel like getting impatient because I want to feel like I'm "in business" again - - but first run is don't shoot yourself - hence - I'm still waiting.
 
MichealKnight said:
Sorry that this was your son's first home experience -- but as you said at least it's in a good area and while the 10k stings - it could have been worse.

I'm going into rehabbing very eyes open - I realize I'm a total rookie. I realize therefore I'll be ceding some profit margin because I probably won't fish out the best deals, and odds are I'll pay a bit more for the rehab work due to lack of knowledge. But gotta start somewhere. Bring very conservative - and luckily the broker/property manager I have a good relationship with is equally conservative and I suspect that's why i'v e probably missed on a few -- but yeah, I'll keep the diligence clauses on my offers.

Some days I feel like getting impatient because I want to feel like I'm "in business" again - - but first run is don't shoot yourself - hence - I'm still waiting.
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I got back in too early in the Phoenix area last goaround. I have been bailed out, but I'm a lot more conscious of where the market is heading now. Prices will have to drop a lot more before anything pencils well enough to write a check.
 
My chins bought her first home just as interest rates peaked. I told her if she likes where she lives, the house is in reasonably good shape and she will live there more than seen years, then not to worry.

FWIW, her payment before tax deductions is only about $300 more than the rent for her crummy two bedroom apartment. And the grand now has a puppy and an above ground pool.

Other than the puppy, I think she did well for her first place.
 
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It's been 2 months now and the house across the street is still for sale. Not getting a lot of traffic either.
 
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