Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Real Estate Bubble?
Old 04-21-2021, 12:20 PM   #1
Thinks s/he gets paid by the post
Keim's Avatar
 
Join Date: Feb 2007
Location: Moscow
Posts: 1,394
Real Estate Bubble?

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?
__________________
You can't enlighten the unconscious.
But you can hit'em upside the head a few times to make sure they are really out...
Keim is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-21-2021, 12:51 PM   #2
Full time employment: Posting here.
 
Join Date: Nov 2015
Posts: 597
It is a bubble. We'll see the fall in 5 years. Also, if you pay over asking, you got taken.
ponyboy is offline   Reply With Quote
Old 04-21-2021, 12:53 PM   #3
Thinks s/he gets paid by the post
Out-to-Lunch's Avatar
 
Join Date: Jan 2020
Location: Milwaukee
Posts: 1,150
Some buyers are currently renting, for example.
__________________
The closing years of life are like the end of a masquerade party, when the masks are dropped. -Arthur Schopenhauer, philosopher (1788-1860)
Out-to-Lunch is offline   Reply With Quote
Old 04-21-2021, 12:53 PM   #4
Thinks s/he gets paid by the post
 
Join Date: Oct 2007
Location: Willamette Valley, Oregon
Posts: 1,376
Maybe no bubble, I don't know. I suppose as long as interest mortgage rates low, demand will not abate to any "bubble crashing" extent.

But I would expect supply to gradually move to more near normal inventory levels as covid vaccines roll out, and as initial work-from-home surge tapers off or reverses.

So, maybe no crash, but the price increases and supply shortage cannot continue at the current blistering pace. One year? Six Months? Fifteen months? To a more normal supply? Place your bets.
__________________
Dreams Worth Dreaming are Dreams Worth Planning For. I Spent a Career Planning for Early Retirement.
RetireeRobert is online now   Reply With Quote
Old 04-21-2021, 12:58 PM   #5
Thinks s/he gets paid by the post
teejayevans's Avatar
 
Join Date: Sep 2006
Posts: 1,551
Quote:
Originally Posted by ponyboy View Post
Also, if you pay over asking, you got taken.

Here in Florida, thatís pretty common for any desirable property...youíll have plenty of company.
teejayevans is offline   Reply With Quote
Old 04-21-2021, 01:11 PM   #6
Full time employment: Posting here.
 
Join Date: Feb 2016
Location: SoCal
Posts: 867
My net worth is 78% real estate, hope the good times keep going.
Mr. Tightwad is offline   Reply With Quote
Old 04-21-2021, 01:17 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Aug 2010
Location: Back woods of Fennario
Posts: 1,096
I wonder if buildable lots are going up as fast? It is crazy expensive right now to build - both materials and labor.
__________________
"Time wounds all heels...." - Groucho Marx
LRDave is offline   Reply With Quote
Old 04-21-2021, 01:28 PM   #8
Thinks s/he gets paid by the post
flintnational's Avatar
 
Join Date: Mar 2008
Location: Atlanta Suburb
Posts: 1,461
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.
__________________
"Oh, twice as much ain't twice as good
And can't sustain like one half could
It's wanting more that's gonna send me to my knees" - John Mayer
flintnational is offline   Reply With Quote
Old 04-21-2021, 01:28 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
OldShooter's Avatar
 
Join Date: Mar 2017
Location: City
Posts: 6,524
Bubbles are never visible in the windshield, only in the rear view mirror. In the mean time, everyone wants to stay at the party until just before cops show up.

Fama on bubbles: https://www.ai-cio.com/news/cant-spo...s-eugene-fama/
__________________
Ignoramus et ignorabimus
OldShooter is offline   Reply With Quote
Old 04-21-2021, 01:36 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
JoeWras's Avatar
 
Join Date: Sep 2012
Posts: 7,323
What the hell? I decided to look at both Zillow and actual recent sales in our neighborhood.

NUTS!

I know R.E. has gone expensive, but this is gone into crazy territory. 15% since year start. The curve has gone exponential.
Attached Images
File Type: jpg re.JPG (18.6 KB, 179 views)
__________________
Retired Class of 2018


JoeWras is offline   Reply With Quote
Bubble!
Old 04-21-2021, 02:09 PM   #11
Confused about dryer sheets
 
Join Date: Apr 2021
Location: Albuquerque
Posts: 9
Bubble!

Yes, the SFH market is in a bubble almost everywhere in the US. Although part of what's fueling this is low interest rates: most buyers decide what's affordable by the monthly payment, not the total purchase price; and as a lower rate lowers the payment, people can afford higher purchase prices.
HoneyBadger is offline   Reply With Quote
Old 04-21-2021, 02:12 PM   #12
Dryer sheet aficionado
 
Join Date: Sep 2018
Posts: 33
As I look at how prices have increased, my initial reaction is it must be a bubble... but I’m no expert. I am surprised by the number of people/experts who are saying it *isn’t* a bubble. ��*♂️

I’ve been casually shopping for a vacation home, nothing serious, but I have definitely noticed prices increasing with supply decreasing. I asked a friend who is a realtor, who didn’t really have any concrete explanation or timeline for what’s going on. We speculated it’s a lot of exodus from city-dwellers who no longer need to live in expensive urban areas since they are working from home. What’s interesting is she notiiced all this has affected is existing houses; condos, apartments, and new homes haven’t seen a spike in her market.

Also we talked about how some segment of the population has MORE cash on hand after COVID lockdowns because they’re commuting less (gas/tolls/repairs), working from home (not buying new work clothes), little or no eating out at restaurants, etc. People have been saving a lot more than usual this past year, and are willing and able to pay more.

In the meantime, my (tentative) plans for buying a vacation home are on hold unless prices start to scale down. I also don’t see myself paying over list price and getting into a bidding war. So we’ll see what the future holds.
jrcunniff is offline   Reply With Quote
Old 04-21-2021, 02:35 PM   #13
Dryer sheet wannabe
 
Join Date: Jan 2020
Posts: 16
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.
yhoomajor is online now   Reply With Quote
Old 04-21-2021, 02:39 PM   #14
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Sheltered in place
Posts: 34,426
To better understand the topic and the responses, would anyone care to define a real estate bubble and how it differs from a strong real estate market.
MichaelB is offline   Reply With Quote
Old 04-21-2021, 02:42 PM   #15
Thinks s/he gets paid by the post
Keim's Avatar
 
Join Date: Feb 2007
Location: Moscow
Posts: 1,394
Quote:
Originally Posted by MichaelB View Post
To better understand the topic and the responses, would anyone care to define a real estate bubble and how it differs from a strong real estate market.
<sarcasm>
A bubble is when I either:
Can't afford to get into the market OR The market goes down immediately after I purchase.

A strong real estate market is when I can afford to get in, and the market continues to go up after I do so.
</sarcasm>
__________________
You can't enlighten the unconscious.
But you can hit'em upside the head a few times to make sure they are really out...
Keim is offline   Reply With Quote
Old 04-21-2021, 02:43 PM   #16
Full time employment: Posting here.
FlaGator's Avatar
 
Join Date: Aug 2008
Location: The 850
Posts: 673
Bubble, but will likely go on longer than I think it will. Residential RE price cycles have historically been 15 yrs +/- one->two years. Last peak was 2005-6.

I have no clue what will bring the price increases to an end, nor if nominal home values will just flatten for a while, or experience a decline. Both have happened.

After the last peak, first payment defaults were an early indicator of trouble. Mortgage delinquency rates are something keep an eye on.

I'd be selling now if the kids were launched, but that's a few years out. Sure wouldn't be buying, especially a seasonal rental which are common in my area.
__________________
Stay at home slacker dad since 2015
FlaGator is online now   Reply With Quote
Old 04-21-2021, 03:02 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
JoeWras's Avatar
 
Join Date: Sep 2012
Posts: 7,323
Quote:
Originally Posted by yhoomajor View Post
What many call Bubble is just another incarnation of Inflation. Which many refuse to admit is rampant right now.
This.

My 22 yr. old HVAC is having issues, with a small slow coil leak finally occurring. I could limp it for an unknown time (week, month, year?) by refilling the refrigerant (R-410). (I saw one guy on bogelheads claim he has a barrel of R-22 so he just refills every now and then and keeps his unit running 'forever.' Never mind the ozone layer.)

But due to changing efficiency laws, I can't even get a coil that will fit in the space of my unit. So, it is time to look at both a new furnace and compressor.

I don't like the price quotes, but you know what? I don't see them going down. So instead of playing chicken with inflation, I just bit the bullet and sprung for a new unit which will go in this week. Time to Blow That Dough.
__________________
Retired Class of 2018


JoeWras is offline   Reply With Quote
Old 04-21-2021, 03:08 PM   #18
Moderator
Aerides's Avatar
 
Join Date: Nov 2015
Posts: 8,024
Quote:
Originally Posted by FlaGator View Post
Mortgage delinquency rates are something keep an eye on.
While rates are low, mortgages aren't easy money right now. Lenders can afford to be picky - massive down-payments, extra picky on criteria, etc. Sellers are taking cash offers when they are made.

So, on the whole, delinquencies shouldn't surge. Not like last time, where high risk loans where underwriting the market. And even if they do, there will be buyers ready to snap up foreclosures.

Also on bubble-no-bubble...housing rates only just crept back up to pre-collapse levels in the past year in a lot of markets. Zillow still has our home slightly under the 2007 peak. So maybe a tiny part of this stuff is also catching up and correcting from back then?
Aerides is offline   Reply With Quote
Old 04-21-2021, 03:23 PM   #19
Thinks s/he gets paid by the post
 
Join Date: Aug 2010
Location: Back woods of Fennario
Posts: 1,096
Two anecdotes (not data):

1) Our friends in metro Boston put their house on the market and sold it in 3 days $200K over the asking. BUT, they took the best all cash/no inspection offer and not the best qualified buyer/requested inspection offer, which was much higher. The realtor told them cash offers are winning almost every time.

Per Zillow, DW's vacation rental in coastal GA is still $100K below its highest Zillow estimate ever (2008ish). There is almost no inventory so I am having a hard time understanding this.
__________________
"Time wounds all heels...." - Groucho Marx
LRDave is offline   Reply With Quote
Old 04-21-2021, 03:29 PM   #20
Thinks s/he gets paid by the post
ExFlyBoy5's Avatar
 
Join Date: May 2013
Location: Country Living
Posts: 4,804
Quote:
Originally Posted by LRDave View Post

Per Zillow, DW's vacation rental in coastal GA is still $100K below its highest Zillow estimate ever (2008ish). There is almost no inventory so I am having a hard time understanding this.
The thing to understand is "Zillow" which tends to have issues depending on the market.
__________________
Retired in 2014 at the Ripe Age of 40
ExFlyBoy5 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 2 (0 members and 2 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Real Estate Agent in Down Real Estate Market TromboneAl Other topics 4 06-09-2007 10:20 AM
What Real Estate Bubble? Art FIRE and Money 76 11-09-2006 03:33 PM
The real estate bubble is over cute fuzzy bunny FIRE and Money 43 05-16-2006 03:55 PM
Real Estate Bubble in D.C. - CBS News tonite.... Cut-Throat FIRE and Money 23 05-19-2005 01:44 PM
Shiller - "We now have a Real Estate Bubble"...... Cut-Throat FIRE and Money 29 04-11-2005 05:20 PM

» Quick Links

 
All times are GMT -6. The time now is 08:58 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.