Is the realestate bubble bursting?

[kgtest]

Last week there was an article in the WSJ about rents going up. Apparently in some major markets, people are bidding above the asked rent to get the place. As more people with money hold off on buying, they’re renting and willing to pay for a nice place to wait it out.

During the 2008-9 crash, rental demand went up. Some walked away from homes that were severely underwater and rented instead.

Are people underwater already? I look at the 800k home for sale in my neighborhood and I think...how would anyone be able to afford that. And if they could I would want a better location as the home has no privacy. Glad I bought in 2014. I did buy above my price range and above my affordability number knowing it was the home we would raise a family in. We had no furniture for at least a year but now I refi down to a 15yr no sweat. With inflation comes high salary. If you would have told me in 2014 that in less than 7 yrs we would be clearing 250k annual salary I wouldn't have believed it.

 

[jfn111]

I've definitely seen a slowdown in the Minneapolis market. I just set up a showing for a customer for Monday the 4th. In the past there was no way the house would be on the market for 4 days. Now it's becoming more the norm.

 

[harllee]

Here in the NC mountains resort area where I am there many rentals still available for this holiday weekend at the rental companies, VRBO and Air BnB, some are advertising reduced rents for July. That has never happened here in all the years I have been coming here (at least 10 years.) Normally there is not a rental to be found for July 4th weekend.

 

[karen1972]

In our area I would certainly not call it a burst other than yes the crazy has stopped and we are going back to more sanity.

Now that inventory is building you actually have a choice between home A or B, so you still may get 2 offers on A because its got a better lot, better design choices etc and B may have to lower its price or wait for the other home to sell so its again the only choice because it is sub-par.

New construction is still selling decently though I see they have offered more lower end homes by not upgrading them as much so the price looks better.

We shall see, there are 2 homes listing this week on the same street and an existing Opendoor (that was $50k overpriced). If the market has really burst it will show up in the sale of the home that is listed as "coming soon". Its about $12k underpriced, I assume for a quick sale, if it doesn't sell immediately then I will feel like the market is actually getting soft soft and prices will start to decrease rather than just stop increasing so insanely.

 

[Chuckanut]

Last week there was an article in the WSJ about rents going up. Apparently in some major markets, people are bidding above the asked rent to get the place. As more people with money hold off on buying, they’re renting and willing to pay for a nice place to wait it out.

During the 2008-9 crash, rental demand went up. Some walked away from homes that were severely underwater and rented instead.

One other thing happened. The Boomerang generation came back to live with mom and dad.

 

[copyright1997reloaded]

Houses here are still getting multiple offers above asking prices, which are already crazy high, and selling within a two hour open house. Inventory is still a bit low.

Where is here?

 

[MarieIG]

Where is here?

IIRC - Meleana downsized from a large property in NY to a smaller place in New Hampshire . . . I remember thinking how beautiful the NY property sounded as described, although we would not buy another place in NY.

 

[Magus]

When recession is going to set up, it will, depend on neighborhood.

They don't historically. In in 2008-2009, rents only dropped 2% nationally and rebounded within 6 months. Rents are extremely sticky generally. Individual markets sure but I wouldn't bet on it in general.

 

[captain3d]

Rents have not appreciated like the high level on the properties.

Current property prices are mostly too high now to be covered by the more realistic rent payments. Property prices need to come down to match rents or rents need to go up anther 30%

Rent prices are much more linked to affordability than property speculation.

 

[Katsmeow]

How are home prices in Vegas, comparable to DFW?

I would say that are fairly comparable in terms of median. The median is maybe a little higher in Las Vegas but not by much. Las Vegas is smaller than DFW obviously and you don't have as much range in prices. In DFW some houses are quite a bit less expensive because they are really on the outskirts. Las Vegas is geographically smaller so that isn't as much of a factor. In fact, many of the more expensive homes are on the outskirts. It is just that by DFW standards we wouldn't think of them as being very far away.

The other thing is that lots of houses in Las Vegas have very small lots. And, it is not unusual to see SF homes that are under 1500 SF. We don't see that in DFW so much except for houses that are specifically built as patio homes or villas. But, in Las Vegas, lots of houses listed have no real yard to speak of and the houses are very close together.

 

[MC Rider]

But, in Las Vegas, lots of houses listed have no real yard to speak of and the houses are very close together.


I'd much rather have a smallish house on bigger lot so the neighbors are waaaaay over there and I don't have to hear their every belch and word.

 

[Ian S]

I've followed our home's Zillow estimate for over two years. Over the past month to six weeks, the estimated price has leveled off (no change when it had been inching up every week) and over the past two weeks it has dropped slightly twice in a row. This is in the Sedona, AZ area which is popular with tourists. The median age of residents is high (lots of retirees) and there are many second homes. In the three years since we bought, Zillow has our home up 95%. In three years nearly half the homes on our street have sold. All the homes on our street are more than 25 years old.

 

[Magus]

Rents have not appreciated like the high level on the properties.

Current property prices are mostly too high now to be covered by the more realistic rent payments. Property prices need to come down to match rents or rents need to go up anther 30%

Rent prices are much more linked to affordability than property speculation.

Possibly in your area but nationwide rents have only trailed median housing prices by about 10%, and are likely to continue to rise much faster. See WSJ article on rent bidding wars last week

 

[SVHoper]

I've always wondered back when Prop 13 was first passed how many homeowners were smart enough to move their home from their individual name(s) to a company name.

Then just transfer the company stock when selling so any new owner keeps the tax basis...e.g. 1234 Main Street has remained owned by "ACME Properties, Inc." since 1978.

If >50% of company stock changes hands, it triggers property tax revaluation. Also companies are required to report annually whether that trigger occurred. So I think, fraud would be involved.

 

[Another Reader]

If >50% of company stock changes hands, it triggers property tax revaluation. Also companies are required to report annually whether that trigger occurred. So I think, fraud would be involved.

Corporate changes in control trigger reassessment. The SBE used to track these and inform the county assessors affected.

 

[jurgs01]

The bubble already burst. The public and financial news will figure it out later this year.

 

[eytonxav]

But, in Las Vegas, lots of houses listed have no real yard to speak of and the houses are very close together.


I'd much rather have a smallish house on bigger lot so the neighbors are waaaaay over there and I don't have to hear their every belch and word.

It really depends on the neighbors. We downsized from a 4300 sq ft house on almost a half acre, to a 2500 sq ft house on 5500 sq ft lot, and our little patio home is not nearly as impacted by neighbor noise as the big lot home. The only regret I have is the bigger home more than doubled in value since our move in 2013, while the smaller home has appreciated a little less than 50%.

 

[Montecfo]

Some evidence of softening or certainly lower growth here in my area in Northern Va. Brand new houses to our west are much more expensive and with higher rates for now that seems like a no-go, but possibly makes values in established neighborhoods more sticky.

Prices probably consolidate for a while but I expect mortgage rates to soften a bit (and ultimately quite a lot), so this may be short lived. This is suburban DC so always more govt employees and companies moving here.

I think we could have a good time to buy in 2nd home areas if rates stay at these levels for a year to 18 mo.

 

[VFK57]

They don't historically. In in 2008-2009, rents only dropped 2% nationally and rebounded within 6 months. Rents are extremely sticky generally. Individual markets sure but I wouldn't bet on it in general.

In 2008-2011 RE prices dropped a lot, even in the hottest RE market like SF Bay Area and DW and I purchased our 2nd rental condo. Of course every neighborhood has different values and demand.

 

[Almost There 2021]

In my area the price of homes is commensurate with the crime rate in NYC. Housing prices are through the roof but people are not selling thus low inventory. Younger folks will never and I really mean never be able to afford to live in the town in which they were raised or even nearby. (Jersey Shore) mecca for NY'ers.

 

[retire202052]

Curious in what city the OP lives?

Also, let's not forget Youtubers get paid by the number of clicks they get on each video. So of course they need to post outrageous titles to get your attention....take the info for what it's worth.

 

[2HOTinPHX]

Op here, we are in Phoenix AZ. In a suburb called Ahwatukee. It used to be called the world's largest cul-de-sac because we were on the edge of Phoenix's South Mountain right before you head to Tucson. Before they recently extended the 202 freeway near us there was only one way out of the area. Pretty nice place except the summer time but the rest of the year the weather is really nice.
From what I am seeing the market is cooling off. More homes with price reductions showing up. Time will tell but it could be good for home buyers not being so pressured to bid things up so high. Hopefully a more normal housing market returning and not a 2007 pop. Remember when it used to take more than one weekend to sell a house?
We actually found a house we really like in different area of Phoenix. Its more of a retirement area with tree lined streets. It's been reduced twice in less than a month from 575K to 530k. Still a little out of our budget for now. Plus it might delay our semi early retirement plans for the end of the year.

 

[RobbieB]

The 2 bedroom across the street is up for sale, I'll report how it goes.

 

[Getyoung]

SFH's in my area were selling the day they hit the market at well over list price during January '22 - mid May. Now they are on the market for quite a few days and I am seeing price reductions after 30 days, as well as listings being terminated.

 

[Chuckanut]

Op here, we are in Phoenix AZ. In a suburb called Ahwatukee. It used to be called the world's largest cul-de-sac because we were on the edge of Phoenix's South Mountain right before you head to Tucson. Before they recently extended the 202 freeway near us there was only one way out of the area. Pretty nice place except the summer time but the rest of the year the weather is really nice.
From what I am seeing the market is cooling off. More homes with price reductions showing up. Time will tell but it could be good for home buyers not being so pressured to bid things up so high. Hopefully a more normal housing market returning and not a 2007 pop. Remember when it used to take more than one weekend to sell a house?
We actually found a house we really like in different area of Phoenix. Its more of a retirement area with tree lined streets. It's been reduced twice in less than a month from 575K to 530k. Still a little out of our budget for now. Plus it might delay our semi early retirement plans for the end of the year.

I was in Phoenix earlier this year. I was surprised at the number of TV commercials from outfits and people who would quickly buy houses for cash. There were almost as many of them as there were tort lawyers looking for car accident victims. Has that changed? Just curious.

There was also some guy offering snake avoidance training for dog owners. His sign was right next to all the tort lawyers signs advertising to represent dog bite victims. Really.