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What's Going on with the Real Estate Market?
Old 07-01-2021, 07:24 AM   #1
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What's Going on with the Real Estate Market?

Real estate prices have really shot up in my city over the past year, and from what I've heard, this is happening all over the place. A few questions:

1. What's going on? Why are prices jumping so high, all of a sudden?

2. Do you expect this to be short-lived, then prices stabilize? Or are we looking at something more prolonged?

3. Would now be a bad time to relocate? Or is it a wash? I'm thinking that since you could sell your old house for more, that would balance out the extra you'd be paying for the new one. But maybe I'm missing something.
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Old 07-01-2021, 07:47 AM   #2
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Here is a recent thread that will help answer some of your questions:

Real Estate Bubble?
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Old 07-01-2021, 07:51 AM   #3
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Yep, everywhere. DFW had 14% yoy. Our first million dollar home in our neighborhood is for sale just this week.

Not sustainable for too much longer, imo. Reactions to lumber prices, Covid buying, extra cash from the gubmint and market appreciation.

Curious to see how the rental market is doing in relation to the housing market. Feels nice to not have to deal with it...
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Old 07-01-2021, 07:59 AM   #4
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In our area of S Texas we are feeling like the market is just about to slow. Availability was very low and EVERY home was going way over asking price (and asking prices were far and away records). But homes are starting to sit a little longer and price adjustments being made. We could be wrong but in our neighborhood we think peak was 3 weeks or so back. But I could be wrong.
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Old 07-01-2021, 08:02 AM   #5
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From reading the local FB moms, buy sell and military pages it sounds like our rental market is EXTREMELY tight and prices high. With the eviction moratorium etc appearing to favor tenants over landlords, I can definitely see landlords either selling out or raising prices. I certainly am looking at both options with our one rental property.
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Old 07-01-2021, 01:02 PM   #6
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From reading the local FB moms, buy sell and military pages it sounds like our rental market is EXTREMELY tight and prices high. With the eviction moratorium etc appearing to favor tenants over landlords, I can definitely see landlords either selling out or raising prices. I certainly am looking at both options with our one rental property.
It does seem to be the first time in a long time that rents have been upwardly sticky. It's been difficult over recent years to maintain ROIs on rental property as values have increased slowly and rents haven't gone up as much. This time is different. Property values are up a lot for the area; and I estimate my rents will go up around 15% when they turnover, which is an overdue change and a meaningful bump in cash flow.

We didn't miss a beat throughout COVID. No doubt this year has been shockingly good for our rental property portfolio; especially given my low expectations in April 2020.
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Old 07-01-2021, 07:02 PM   #7
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Yep, everywhere. DFW had 14% yoy. Our first million dollar home in our neighborhood is for sale just this week.

Not sustainable for too much longer, imo. Reactions to lumber prices, Covid buying, extra cash from the gubmint and market appreciation.

Curious to see how the rental market is doing in relation to the housing market. Feels nice to not have to deal with it...
I am actively seeking a rental in a midwest medium-sized city. Rental inventory is low and price is more than we want to pay. We are flexible on almost all parameters because of no kids at home, so this opens up more options for us. Time and networking I think will help the situation. We are not under any time pressure, however the convenience factor and wanting to get this off of our plate drives us forward.

It's a crummy time to be a buyer or a tenant seeking a new rental now. My brother in law just bought a house in a large midwest metro area and paid more than he wanted and didn't get all of his desired parameters met.
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Old 07-01-2021, 08:25 PM   #8
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We live in the triangle area in central NC. The housing market here is very hot. We looked for new construction homes for a couple of months starting at the end of 2020 before giving up.

New construction agents explained that they were capped with what they could sell per months (contracts signed) to anywhere from 2-5 contracts per month depending on the builder. They said they couldnít get the supplies fast enough to build homes and there was also a labor shortage.

Our area is so popular people are buying lots from out of state or even out of the country site unseen. Lot premiums for even small lots (under 0.33 acres) can reach as high as $50000 and typically run in the $15000-$30000 range.

A development we liked close to where we live now is opening a new phase of 20 new lots soon. When we checked with the agent several months ago there were already over 150 people on the waiting list for the lottery system they decided to use to determine who could buy these lots. Two lots will be sold per month over ten months. They just started the lottery last month and I canít even imagine how many people are on that list now.

Itís crazy here. Low interest rates, mass migration from the northeastern US, COVID related changes that have people spending more time at home and wanting to upgrade, and big announcements of new major employers moving to the area have resulted in quite a market.

We gave up hope for trying to find reasonable prices. The movement from the northeastern US includes many people coming from areas where housing is even more overpriced so NC looks like a bargain.

Even in normal times we could easily get double digit growth per year. Highway systems and schools were struggling to keep up. But even by that comparison there is something special going on in our local market. And there seems to be no end in sight.

It will take significant increases in interest rates, a recession, or further rapid housing inflation to even attempt to cool off this market. At this point lumber is becoming as valuable as gold. Not sure how this compares to the rest of the country but the Raleigh/Durham/Chapel Hill market is blazing hot!
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Old 07-01-2021, 08:39 PM   #9
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Originally Posted by ER Eddie View Post
Real estate prices have really shot up in my city over the past year, and from what I've heard, this is happening all over the place.
They really skyrocketed here, too! The insanely high prices would be hilarious if it weren't for the plight of first time buyers in this market.

I am not a real estate professional, but it seems to me like maybe they are starting to level off right now in my neighborhood. Maybe.

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A few questions:

1. What's going on? Why are prices jumping so high, all of a sudden?
I think it's inflation but I guess most people think there are other reasons. Articles I read say that people can work from home these days so a lot of people are moving to areas they prefer.

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2. Do you expect this to be short-lived, then prices stabilize? Or are we looking at something more prolonged?
I think they will stabilize, but I don't think they will go back down.

As you assess my answer, bear in mind that I never in a million years would have expected the real estate volatility back around 15 years ago or so. At that time, I thought real estate could not drop in value. Boy was that a surprise.

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3. Would now be a bad time to relocate? Or is it a wash? I'm thinking that since you could sell your old house for more, that would balance out the extra you'd be paying for the new one. But maybe I'm missing something.
From an investment perspective I'd think it was a bad time to relocate. You get more for the house you sell, and that will help you pay for the new house. But then, you may want to rent for a year or so between houses, to decide on a neighborhood, or to find the right house in this crazy real estate market. And rents are supposed to be going up too, pretty soon if not already.

I hear that you pretty much have to provide an all cash offer for considerably more than asking price, and even so you'll lose house after house before you manage to snag one. Also, I suspect that the houses available to buy are not as nice as they used to be, since people don't have to fix up a house to sell it.

The decision is complicated by the fact that life is short, and you might as well enjoy it! I think that if I really wanted to relocate, I'd do it in a heartbeat. I think that if I didn't especially care and was just thinking about it because I was bored, I'd shelve that plan and wait.
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Old 07-02-2021, 05:06 AM   #10
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Same here. I'm actually astounded by it because I've been living here almost 40 years and home prices haven't really moved all that much until the last year. So, just recently I noticed that homes that are small like mine are for sale and the owners are asking almost double what they would have over a year or so ago. Then, I checked out rental property and the rents are skyrocketing--significantly. I remember, too that a previous coworker sold his home six months ago for way more than what he thought he could get by over 40%. A relative who was an agent called him to ask if he was interested in selling and informed him of the current value so he jumped on it and sized up. I regularly look at homes and there are almost no "cheap" homes for sale anymore. At first I thought it was due to a casino they are getting ready to start building here, but now I wonder if it isn't only just that. I've read that casinos can actually bring down home values, though I know many around here are convinced the opposite because they believe the casino will buy up lots of nearby property which I happen to be in the vicinity of. I am hoping to relocate to a beach area, but my time horizon for that was 2 to three years but perhaps that dream will be realized sooner than later. I've noticed that the home prices in the beach area took a slight jump also in the past few months. Seems odd to be in a real estate boom considering so many are not working and right after the covid circumstances that have affected people.
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Old 07-02-2021, 05:47 AM   #11
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Signs that it is beginning to moderate: lumber prices down sharply, more inventory coming on the market.

Might take a couple of years, and steady state housing market will be more robust than pre-pandemic, in my view.
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Old 07-02-2021, 06:23 AM   #12
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3. Would now be a bad time to relocate? Or is it a wash? I'm thinking that since you could sell your old house for more, that would balance out the extra you'd be paying for the new one. But maybe I'm missing something.
Bad time unless you are moving with the new house ready/found/contracted.

Here's what's happening. You sell your house for $500k, thrilled! Just last year it was worth $350. The neighborhood you are eyeing in about $500k on average, just a few homes available, but you'll find something, right?

You sell and start looking for the new home. Those $500's are starting to list at $550. And your RE tells you the last one that sold had a bidding war and sold for $600 when the asking was only $525...and the ones listing at $550 are those that need $100k of work to be on par with your prior home.

I would not want to be shopping until things stabilize. If that means stopping at the top, fine, but right now it feels like you'd be trying to jump between moving cars.
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Old 07-02-2021, 06:33 AM   #13
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Anything in our area that is move in ready in a decent location automatically starts with a bidding war with escalator clauses and is off the market within 7 days.
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Old 07-02-2021, 09:21 AM   #14
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DS and his GF bought - 1st time owners - and paid over asking on the 3rd day it was on the market and there were competing offers. They had a larger down payment. Did they get taken? Hard for me to counter the idea. Their very low interest rate more than compensates for the additional cost to them. I think DH and I had a rate of 12 - 14% for our first home. Their payments are less than ours were and their house costs twice what ours did.

They have to live somewhere and renting anything with a yard could easily cost them much, much more if they could find such a place and even considering paying their own taxes. Lumber prices can come down but labor prices aren't coming down so new builds are continuing to cost more (in this area starter-home new builds are much higher than they paid).
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Old 07-02-2021, 09:58 AM   #15
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1. What's going on? Why are prices jumping so high, all of a sudden? Millennials are bailing out of their parents' basements, and they'd rather get into a starter home than pay more in apartment rent. Demand raised the prices of starter homes substantially, and allowed the present owners to step up to a mid-cost home.

2. Do you expect this to be short-lived, then prices stabilize? Or are we looking at something more prolonged? It's all supply and demand. Many markets are in bidding wars with few homes on the market. I'm not optimistic home prices will stabilize unless cost of mid-line homes (and lumber prices) stabilize.

3. Would now be a bad time to relocate? Or is it a wash? I'm thinking that since you could sell your old house for more, that would balance out the extra you'd be paying for the new one. But maybe I'm missing something. You're hitting on the reality of selling--if you're presently in a home. Sell high, but you'll be replacing with a another home at a high price too. It all is based on how hot the housing market is in where you're wanting to relocate to.

I'm just glad we relocated 18 mos. ago because our house is up 15+% since then. We really didn't realize what a bargain we got @ $89 per square foot for a 12 year old home in like new condition.
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Old 07-02-2021, 12:08 PM   #16
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Itís very sad that young families can no longer afford homes in our area. We moved to our current home Ö with two kids in tow and a third on the way Ö over twenty years ago and could afford the down payment and mortgage on one income.

No way thatís happening today. Recent sales in our immediate area are above $1 million (over 3x what we paid 20 years ago) and inventory is very low.

We continue to hold on to a rental home close to our primary residence in hopes that one of our grown children might want to come back to California when they settle down with a family.
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Old 07-02-2021, 03:17 PM   #17
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I'm just glad we relocated 18 mos. ago because our house is up 15+% since then. We really didn't realize what a bargain we got @ $89 per square foot for a 12 year old home in like new condition.
We moved just shy of two years ago, and our house is up 15% in that time. I'm not sure it's our long-term home, as the desire for lower maintenance living may arrive sooner than expected.
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Old 07-02-2021, 03:44 PM   #18
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I posted in the other thread, linked in the 2nd post,.... Here in San Diego prices are completely bananas. My neighborhood has 60 year old, 1200 sf, tract homes selling for close to a million. If it's got a canyon view, or is 2ksf or more it's well over a million... This is not sustainable.

I've started hearing lines like "they aren't building more land"... which was a mantra during the over-heated RE market of 2006/early-2007. We know how that ended.

I'm not as familiar with other areas. But I'm hoping Philly is booming too - my BIL passed recently and his siblings are the heirs... It would be nice to get a good sales price on his rowhouse. One of the surviving siblings, specifically, could really use the money.
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Old 07-02-2021, 04:22 PM   #19
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Really poor timing, but my husband decided he wanted to relocate. House prices in the Colorado Springs area were beyond my means, so we’ve ended up and hour away from his work in a very isolated area. The price was still obscene, and, while I have a contract on my Alabama house, it will not come close to paying for the Colorado adventure. I’m still in sticker shock. The post office doesn’t deliver mail to the Colorado house - we have to pay for a PO Box. The contract on my Bama house is way more than it is worth, so I am worried that it won’t appraise out. I would have rented had there been anything decent available for less than $2500/month. We have dogs which compounds the difficulty of renting.
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Old 07-02-2021, 08:56 PM   #20
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For what its worth... I live in lake country Minnesota. Values have increased and sellers are getting crazy with their listing prices. The market has peaked and is backing down. Listings that used to get multiple offers the first few days are waiting weeks for any offer.


Buyers are the ones that determine what your house is worth. Not what you have in it or what you think someone else should pay for it.


I see a plateau from the past year.
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