Real Estate Bubble?

[Walt34]

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Originally Posted by JoeWras We get folks coming from NY, for example, who are used to half million dollar homes. They come here and see the equivalent at 300k and have no problem making a rising cash bid.

That was the effect on us 20 years ago coming from the DC area. Put this house in the DC area and it's multi-millions, according to Zillow it's market value is $326k, and that's up 10% in just the last month. That's insane and not sustainable. And probably not realistic either.

But 20 years ago we found ourselves looking at nicer houses than we ever dreamed we'd be living in, and because of the sale of our paid-off house near DC we could write a check for it. And so we did. Probably a lot of that going on now.

[Surewhitey]

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Originally Posted by JoeWras We're way ahead of the 2008 highs in this market. Every market is different. NC also has the unique issue of migrants from higher priced markets. I think karen mentioned this earlier. We've seen waves in the past, but this influx seems huge. We get folks coming from NY, for example, who are used to half million dollar homes. They come here and see the equivalent at 300k and have no problem making a rising cash bid.

For sure in Dallas (not greatly affected in 2008). We moved to California from Dallas in 07-08. Sold our home for $168k. Today the same home could get you $300k, easily. Dallas is still affordable by those #'s, but it has greatly appreciated in the past 5 years or so.

DD bought their home in 2012 for $180k & is easily able to get $350k today.

[jrcunniff]

Once forbearance ends and mortgages - and rent for those mortgages - are due, there will be a greater supply due to foreclosures. I doubt there have been many foreclosures recently due to COVID hardship allowances.

Might not be enough to send prices down, but potentially could level off prices.

[Another Reader]

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Originally Posted by jrcunniff Once forbearance ends and mortgages - and rent for those mortgages - are due, there will be a greater supply due to foreclosures. I doubt there have been many foreclosures recently due to COVID hardship allowances. Might not be enough to send prices down, but potentially could level off prices.

The percentage of loans in forbearance is actually quite low. 4.5 percent currently, per the MBA.

https://www.mba.org/2021-press-relea...to-450-percent

The feds will take more steps to prevent them if necessary, a la HARP 2. As soon as it's possible to evict, landlords will do it. I don't see any problem absorbing whatever foreclosures do occur.

[mrstop]

Quote:

Originally Posted by jrcunniff Once forbearance ends and mortgages - and rent for those mortgages - are due, there will be a greater supply due to foreclosures. I doubt there have been many foreclosures recently due to COVID hardship allowances. Might not be enough to send prices down, but potentially could level off prices.

Quote:

Originally Posted by Another Reader The percentage of loans in forbearance is actually quite low. 4.5 percent currently, per the MBA. https://www.mba.org/2021-press-relea...to-450-percent The feds will take more steps to prevent them if necessary, a la HARP 2. As soon as it's possible to evict, landlords will do it. I don't see any problem absorbing whatever foreclosures do occur.

Hedge funds are also likely standing by, salivating, to take more properties.

[LRDave]

Quote:

Originally Posted by Another Reader The percentage of loans in forbearance is actually quite low. 4.5 percent currently, per the MBA. https://www.mba.org/2021-press-relea...to-450-percent The feds will take more steps to prevent them if necessary, a la HARP 2. As soon as it's possible to evict, landlords will do it. I don't see any problem absorbing whatever foreclosures do occur.

And as I mentioned earlier in the thread, the short selling arm of the residential real estate industry is itching to get back to work. I bet lenders will be willing to write down some losses to get the bad loans off their books and there will be plenty of buyers waiting on the other side of the transaction.

[OldShooter]

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Originally Posted by mrstop Hedge funds are also likely standing by, salivating, to take more properties.

I remember when the Japanese were going to own America, then it was the Saudis. Ho hum. I'd be curious to know what the corporate history on residential real estate has been and the trend. My guess, unhampered by any actual facts, is that large corporate ownership of small residenial properties is negligible.

[Finance Dave]

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Originally Posted by Keim I was at a presentation by a Realtor discussing our local market. Like many, it is really hopping. Home values going up $15k every two weeks, limited inventory, offers with no contingencies going $50k over asking on first bid. The realtor discussed her thoughts on why-Covid making our rural market more desirable, etc. I asked-if people are moving here they must be leaving somewhere. Supply and Demand what it is, that means the market is down somewhere. Where? She claimed the market was up everywhere, but insisted she expected no imminent crash and we weren't in a bubble. How's that work?

Makes no sense to me. First off, anyone who buys a house without an inspection contingency is ...well I won't say the word.

Secondly, the house must appraise for the sale price or the bank won't loan that much...then the buyer will have to either come up with the extra money or decline the purchase.

I am a retired home inspector, and I can't tell you how many deals I saw fall through for a whole host of reasons.

I don't understand your comment about "that means the market is down somewhere"...that makes no sense.

[Finance Dave]

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Originally Posted by flintnational I can only speak to our market, Atlanta metro. Zillow says our house has increased 11% in the last 30 days. An aquaintance bought their first investment property. They were excited because they beat out 32 other offers. My bet is on bubble. ETA: But as we know, bubbles can go on for years.

Zillow is notoriously WRONG. I have 5 rentals and I belong to a landlord association. We have done comparisons between actual selling prices and the "Zestimate" that Zillow publishes...they are often different by 20% or more.

[Finance Dave]

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Originally Posted by yhoomajor What many call Bubble is just another incarnation of Inflation. Which many refuse to admit is rampant right now. - Building costs have doubled - Labor costs have spiked (if you can find someone to do the actual labor) - Everything else has gone up. A house is just culmination of all these things, plus some local factors (based on location). But too much Stimulus money is floating around the system. Most everyone's (who is not running his own small business) income has been going up as well. People who were working for $12/hr last year, don't want to come back less than $18/hr. You do the math. Too much deficit spending does impact one segment - those reliant on fixed income. Sad but true.

I think this is the closest thing to the truth.

[ShokWaveRider]

Unfortunately it seems that inflation is not a measure against things that actually affect most every day people. Food, Fuel, housing, all not counted. Seems like a made up metric to me. Our costs have gone up 20% over the past 2 years, but inflation is ~0, go figure.

[Dtail]

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Originally Posted by ShokWaveRider Unfortunately it seems that inflation is not a measure against things that actually affect most every day people. Food, Fuel, housing, all not counted. Seems like a made up metric to me.

As you have stated in the past, it is one's personal inflation rate which really matters.

[ShokWaveRider]

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Originally Posted by Dtail As you have stated in the past, it is one's personal inflation rate which really matters.

That is true, but that does not affect interest rates.

[RunningBum]

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Originally Posted by ShokWaveRider Unfortunately it seems that inflation is not a measure against things that actually affect most every day people. Food, Fuel, housing, all not counted. Seems like a made up metric to me. Our costs have gone up 20% over the past 2 years, but inflation is ~0, go figure.

I've owned my house for 20 years. I could easily live here for another 20. Housing prices are not affecting me daily or even yearly. Even my property tax has only gone up 10-20% in those 20 years.

[NW-Bound]

A local real-estate office sent me a postcard soliciting business. The postcard showed a dozen houses in the area with deals recently closed. They stayed on the market from 0 to 5 days. The 5 day is an outlier, as most are 2 and 3 days.

My 2 new neighbors immediately spent more money on their home after moving in. One had a landscaper tearing out the front yard to build a courtyard for a sitting area. The other tore out all the interior and trashed all cabinets and appliances.

When I was at a nearby Home Depot, I saw that they had 4 or 5 booths to accept returned merchandise. Previously, there were at most 2 positions manned for this service. Foot traffic must be very good.

[SecondCor521]

It seems like someone who was a good reporter would be able to do better digging and find out why this is happening and do a pretty good 60 Minutes-style report / story on it.

Ask a bunch of buyers:

1. Buying to live in, rent out, or second home?
2. Upgrading, downgrading?
3. Source of down payment funds?
4. Age and income?

One could also find some statistics to determine where people are moving from and to on a state-level and urban vs. rural basis.

[troutnut1]

I’m 67 now and I started in real estate when I was 18. I’ve been a broker in three states, an investor in 4, a mortgage loan officer, and an appraiser for over 19 years. And I don’t have a clue. Anyone who tells you they do is a fool or has an agenda. Not long ago there was a big thread here about how a crash was imminent because the boomers wouldn’t want our houses.

[Keim]

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Originally Posted by Finance Dave I don't understand your comment about "that means the market is down somewhere"...that makes no sense.

We have a finite number of potential home buyers. If people are buying here, they must be selling where they are coming from.

Specifically, in this case the realtor had stated one of the reasons our market is hot is because of COVID. People are leaving cities and moving to our rural community. If that's a mass phenomenon, the market should be going down in the cities people are fleeing.

Get it, Finance Dave?

[ut2sua]

Looking from another angle, RE is super cheap right now. Only a handful of bitcoins will buy any house you want.

[RAE]

Quote:

Originally Posted by Keim We have a finite number of potential home buyers. If people are buying here, they must be selling where they are coming from.

Not necessarily - some of these folks buying homes now could have been renting previously. Some younger home buyers may have even been living with parents. You can't assume everyone buying a house now just sold one somewhere else.