Real Estate Bubble?

[Sunset]

I don't know about the city of Chicago itself, but out here in the distant suburbs, prices are zooming. We've lived in this neighborhood for 40 years and houses here have appreciated more in the last year than in the previous couple of decades.

Our neighbor just sold his house.
They had 25 viewings in 2 days, and got 6 offers.
They accepted an offer on the 2nd day.

It closes in 1 month.

 

[RetireeRobert]

Karloff, it is a bubble but it is not just real estate. Everyone is getting slow boiled by inflation and doesn't even realize it because the official word is that there is no inflation.

+1

 

[kgtest]

+1

Yepp. Prices are increasing across the board. And quickly. Had to change a steel order, went from 86c a sq ft to $1.38 sq ft in about a months time

 

[jrcunniff]

Just noticed that a house I was looking at, listed in April for $399,000 was re-listed last week for $459,000. LOL. Guess they weren’t getting enough offers over the list price.

 

[snowboarder]

Just noticed that a house I was looking at, listed in April for $399,000 was re-listed last week for $459,000. LOL. Guess they weren’t getting enough offers over the list price.

There's a house built in 1999 in my area (blue collar) that has dropped $20K in price in the last month. It's not a shack or in disrepair. So maybe we are turning the corner soon.

 

[chassis]

There's a house built in 1999 in my area (blue collar) that has dropped $20K in price in the last month. It's not a shack or in disrepair. So maybe we are turning the corner soon.

@snowboarder What are the particulars? How many bedrooms? Is it the most desirable school district in the area? How far from a busy street/freeway is it located? How far is the nearest new construction? What is the population of the city/county?

 

[NW-Bound]

I recently read an article on the Web about a man wanting to buy a home in Montana. He remembered home prices being quite affordable as he visited the state in his travel, but now found they being out of reach.

I have visited a few towns in Montana myself, so was curious and went on Zillow to take a look. What I saw knocked my socks off.

How about this deal? A home with 2,084 sq.ft. listed for $899K. The lot is tiny at 4,356 sq.ft. Hey, you are supposed to have a lot of land in Montana. The home does not have much curb appeal. The home was built in 1955, and the interior is outdated. There's no garage nor a carport, and just a couple of parking slots by the side of the house, which abuts a driveway to a couple of houses in the lot behind. This means the entire side of the house is exposed to a public right of way, and has no privacy.

My goodness! Montana is getting as expensive as California. Who would have thunk?

Records show the house was $125K in 2012, becoming $280K in 2015, and listed for $900K now. Aye, aye, aye...

 

[SecondCor521]

^ It seems some sellers are putting junk on the market at astronomical prices, hoping for an, ahem, uneducated or desperate consumer to come along.

Prices are generally elevated, but I've also seen dumpy older homes being listed in the same price as newer, updated, nicer homes.

I have in my notes to tell my son that sellers are a varied bunch and some will price too high and some will price too low. I'm going to encourage him to read the market for a while so he can see this firsthand. And hopefully snap up a "priced too low" home, although he'll have to wait for things too cool off.

 

[harley]

This doesn't explain home prices, but I saw an article claiming Soaring lumber prices add $36,000 to the cost of a new home. That could partially explain the increase in prices of existing homes, if new homes are being priced beyond the market.

DD is wanting a new deck, but I've been telling her to wait. IMO lumber prices will normalize at some point, after the politicians stop playing shutdown and tariff games. Plus, wait until the improvement market isn't so frothy, and the builders don't have more work than they can handle, and labor costs will come down a bit too. It's hard to wait when everything is happening, but I consider what's going on now to be buying high. That's what most people do, contrary to common sense and Warren Buffett's advice.

Hope I'm right. Otherwise I might have to build her deck myself.

 

[Teacher Terry]

Homes in northern Nevada are skyrocketing. We had a 1400 sq ft 1950’s ranch that was move in ready. We listed on a Friday and by Sunday night had 33 showings and 4 offers. 2 were 30k over asking and we took the one for 400k. I bought a 855 sq ft condo that was asking 191 and had other bidders. I got it for 211. It is 47 years old and wasn’t move in ready. However, the kitchen was fairly new and the floors were engineered hardwood except for the bedrooms. The reason things are expensive is because of Californians moving in.

 

[RAE]

^ It seems some sellers are putting junk on the market at astronomical prices, hoping for an, ahem, uneducated or desperate consumer to come along.
.

Yep, same thing happening in our part of Central Florida. Just looked at a listing for a very small cottage/house (620 sq. ft) on a small lot that sold for $56K in 2016. Current owner did no improvements to the house, and is now asking $175K. The listing describes it as being "sold as is - fixer upper", and that definitely describes it. There's no way I would pay close to $175 for a place like this! Buyers beware..........

 

[MRG]

Insanity. Our house has almost doubled in value in 5 years but when I look at zillow it's getting ready to go much higher. The only homes listed are totally out of reach, fixer uppers at 300-400+ a foot.

 

[pjigar]

Yes, time to unload fixer uppers! Our house was probably one of the few which wasn't "upgraded". We were able to sell it for an insane price. The new buyer is putting in new flooring, upgrading bathrooms and god knows what on top of it! We are going to have a lot of under water homeowners if things went south.

 

[Starsky]

Evidently, the hot real estate market is impacting rents too. One of my rentals in N.C. just went for $2195, up from $1895 for the precious tenant, and the renter even offered a double deposit to sweeten the deal! I don't think it even hit the market.

Inflation is here in a big way, and it's interesting to watch the Fed twist and squirm to avoid having to raise the CPI...

 

[CRLLS]

^ It seems some sellers are putting junk on the market at astronomical prices, hoping for an, ahem, uneducated or desperate consumer to come along.

Prices are generally elevated, but I've also seen dumpy older homes being listed in the same price as newer, updated, nicer homes.

I have in my notes to tell my son that sellers are a varied bunch and some will price too high and some will price too low. I'm going to encourage him to read the market for a while so he can see this firsthand. And hopefully snap up a "priced too low" home, although he'll have to wait for things too cool off.

While not a home, I know of a 20 acre plot of farmland that annually goes up for sale for ~120K give or take with no buyers. That is way overpriced for land that nets ~$150 per acre rent. This year it is up for sale again. The price? $460k! Yes, astronomical prices.

 

[NW-Bound]

It's another FOMO mania running rampant. How can one profit against that, other than selling whatever real estate he has?

However, I do not have homes or land I want to sell. Where would I live? In an RV?

 

[Sunset]

Neighbor's house was listed $300K , sold for $321K no conditions.
He had fixed it up for the past 2 yrs in preparation to sell, it looked great !
New owners are spending 15 hrs per day , renovating it.

Other than tossing out the carpeting, I have no idea why they are renovating for over a week so far... Can't be to flip the house

 

[braumeister]

Neighbor's house was listed $300K , sold for $321K no conditions.
He had fixed it up for the past 2 yrs in preparation to sell, it looked great !
New owners are spending 15 hrs per day , renovating it.

Other than tossing out the carpeting, I have no idea why they are renovating for over a week so far... Can't be to flip the house

Not uncommon. When one of my neighbors died two years ago, his condo sold for a fairly high price. He was in his 90s and had lived in it since it was built nearly 16 years before, but it was in excellent condition. The new buyers then spent nearly the same amount again (and over six months with multiple contractors) remodeling the interior to meet their tastes. Purely a matter of getting everything to look perfect in their eyes, and nothing at all to do with condition or functionality.

 

[ExFlyBoy5]

Evidently, the hot real estate market is impacting rents too. One of my rentals in N.C. just went for $2195, up from $1895 for the precious tenant, and the renter even offered a double deposit to sweeten the deal! I don't think it even hit the market.

Inflation is here in a big way, and it's interesting to watch the Fed twist and squirm to avoid having to raise the CPI...

Yep. My DW is in the residential leasing biz and oversees portfolios that involves thousands of houses over 5 (or 6) states. Almost universally, as soon as they hit the market, they have multiple applications within a few hours. They are also starting to see people offering higher rents than are listed. It's absolute madness.

 

[RetireeRobert]

Yep. My DW is in the residential leasing biz and oversees portfolios that involves thousands of houses over 5 (or 6) states. Almost universally, as soon as they hit the market, they have multiple applications within a few hours. They are also starting to see people offering higher rents than are listed. It's absolute madness.

Real estate sales, and real estate rentals, both markets are just a couple of the symptoms of the federal government serial trillion dollar printing press spending programs. $1 today will be worth only 75 cents next year (or next month). Shades of Weimar Germany.

 

[daylatedollarshort]

I'm getting 2007 pre-crash vibes. The news here in the Bay Area has had a number of homes here going for $1M+ over asking.


Last crash we hesitated and didn't end up buying a near by condo that had dropped in price to under $100K. We aren't really the real estate investing types but it was such a good deal we gave it some thought. I think this time around we might go for it if that happens again.

 

[troutnut1]

When this is over they will do what they have always done. Blame the appraisers.

 

[Scrapr]

When this is over they will do what they have always done. Blame the appraisers.

To be honest the appraisers were a big problem last time. They were in the pocket of hedge funds asking what do you need the price to be? I have not seen anything yet that they are a problem (this time). People are offering over asking & not worrying about an appraisal. Just throwing more cash at the deal

 

[aja8888]

Just remember, this time it is different.

 

[NW-Bound]

^^^ Speaking of appraisals, here's a real story.

A house down at the corner of my street was on the market recently, and was sold the same day it was listed. The realtor never bothered to put up a "For Sale" sign. The buyer paid the asking price.

However, the appraisal came in at $85K lower than the asking price, and the buyer's bank did not approve the purchase. The seller already bought another home out of town, so quickly accepted $85K less in order for the deal to close.

So, the appraiser was holding back the price in this case, and not pouring oil into the fire.

PS. I heard the story from another neighbor, as it was happening. Just now went into Zillow, and was able to verify the asking price, and the eventual sale price being $85K lower.