Is the realestate bubble bursting?

[ShokWaveRider]

One house just went on sale in our sub-development $380 a sqft. Not too bad.

 

[2HOTinPHX]

I put my house on the market this weekend. Had huge crowds and now have 4 very good offers all above list. Just depends where you are located.

Hmmm...just checked your area on Redfin and saw a lot of listings marked with price drops too.
Congrats on the quick sale. Looks like a nice area.

 

[jgman]

Hmmm...just checked your area on Redfin and saw a lot of listings marked with price drops too.
Congrats on the quick sale. Looks like a nice area.

Just finalized sale. Four good offers ending up selling for 60k over list. It was a nice updated older home under a million which is hard to find in this area.

 

[ShokWaveRider]

Problem with us selling now, is there is nowhere to go we really like. Otherwise, we would sell as prices are stable and very good. Better the home one knows if one does not want to move far.

 

[ExFlyBoy5]

Neighbor sold his house two months ago. Sold in one week 50k over asking price. Just put my house up for sale this coming weekend. Have 7 visits scheduled for tomorrow. Market is just as strong as last year.

Not quite...at least not for year over year. It's not bad by ANY MEANS right now but nonetheless:

https://www.redfin.com/city/6952/VA/Falls-Church/housing-market

Oddly enough Redfin's figures shows my podunk flyover city being a very slightly better market than NVA.

NVA: Many homes get multiple offers, some with waived contingencies.
The average homes sell for about 1% above list price and go pending in around 21 days.
"Hot Homes" can sell for about 3% above list price and go pending in around 5 days

Flyover: Many homes get multiple offers, some with waived contingencies.
The average homes sell for about 1% above list price and go pending in around 6 days.
"Hot Homes" can sell for about 4% above list price and go pending in around 2 days.

Atlanta (worse of the 3): Some homes get multiple offers.
The average homes sell for around list price and go pending in around 20 days.
"Hot Homes" can sell for about 3% above list price and go pending in around 9 days

Edit: Congrats on going under contract!

 

[11522914]

Detailed article on significant housing price drops in California, particularly San Francisco.

https://wolfstreet.com/2022/09/16/c...-peak-silicon-valley-san-diego-orange-county/

 

[jgman]

Buy now or wait a little longer if paying cash?

 

[jazz4cash]

I got a 30 year in late 1982, don't remember exactly but IIRC, about 13.5-14%.



And I recall reading an article in the WSJ print edition sometime in the early 80s, where there were predictions by "experts" that we would NEVER see interest rates under 10% again!

I remember those predictions vividly. Bought my first home in 1982 with a state sponsored mortgage bond subsidy for 1st time home buyers. Rate was 9 5/8ths. A lot of anxious sellers were carrying mortgages of 7-9% for their buyers. I think they called it a land contract in the midwest.

 

[jurgs01]

Buy now or wait a little longer if paying cash?

Mid to late 2023

 

[jgman]

Mid to late 2023

Got it. Ill wait a bit longer.

 

[MichealKnight]

Small sample here

I own (2) rental townhomes in suburban Atlanta - 3bed/2bath.

1st was bought for 247k 1.5year ago.

2nd was about for 305k 1.2 years ago.

Since then....I'd say the apex in value was 6 months ago. Unit one was easily selling for $330k. Unit 2 easily $340k.

Based on listings in both complexes.....I'd say the 330k -- is now $305k and the $340k is now $330k.

As rates rise I don't see how values don't drop some more - - BUT - then who knows maybe the consumer gets a bit used to higher rates because after all..rates were now super low in the 90's - and houses and car sales were still robust. In the end, the American consumer -- likes to buy and spend.

Crash? I'm not able to say that yet.

Softening ? Oh yes, I see it and feel it.

So far no problems in rent. Oddly, one tenant - makes around 180k a year and lives with her teenage kid...she's late sometimes and pays the $25 fee- - heck I'm fine with that.

If job losses get rampant and rents aren't paid.....THEN it's possible to see a crash because people who bought at the apex- were expecting rent and if said rent doesn't come in on a mass basis, then there's a problem.

 

[ShokWaveRider]

People will still buy at high(er) Mortgage rates, then refinance when the time is right. That is what we did in the 80's. Life goes on. I think it is good that the current situation is pricing the folks without the means out of the market. Or they will simply buy cheaper homes more withing their means. Seems to work in Canada and the UK. (The Only other RE Markets I have experience with). The US has spent a lot of time selling homes (And everything else) to folks who cannot really afford them. Maybe this will be a game changer.

 

[ncbill]

heck yeah 6% is enough to motivate me to write a private mortgage for my kid.

 

[tryan]

@MichealKnight

How do you get a positive cash flow at those price points ?? Asking for a friend.

 

[tryan]

Yes the bubble is bleeding air:

https://www.bloomberg.com/news/arti...ho-of-zillow-collapse?leadSource=uverify wall

 

[Looking4Ward]

From the same source, what has happened in the last two years is simply insane. This doesn't include property taxes and insurance, which can often equal principal and interest. The impact on financial ratios and affordability can only push home prices down:

 

[retire202052]

Yes the bubble is bleeding air:

https://www.bloomberg.com/news/arti...ho-of-zillow-collapse?leadSource=uverify wall

"The losses, which don’t include fees charged to customers or expenses incurred in renovating and marketing homes"


Kind of big points.......If Opendoor buys a house for $500K, they charge the seller a 5% fee,(25K), 2% closing costs (10K) and all repairs. I'd estimate they inflate the repairs to triple what they actually do. So for this example, let's say 15K repairs.

So if Opendoor sold this house for $480,000 it would be reported as a 20K loss, when in reality it was a 25K profit.

Click bait article....writer needing content....don't believe everything you read.

 

[daylatedollarshort]

From the same source, what has happened in the last two years is simply insane. This doesn't include property taxes and insurance, which can often equal principal and interest. The impact on financial ratios and affordability can only push home prices down:

I can't get too upset over our home prices going down because the way they went up in the last year or two was simply crazy. Now with tech job layoffs and mortgage rates up, I expect a really, really big crash. It has happened before, and it will happen again.

 

[milford]

Had to pick up some stuff at my local Home Depot last week and there was probably more workers than customers. It is quite a dramatic shift from the last time I went about 6 months ago same time frame 5pm on week day when the place was hustling and bustling.

 

[tryan]

So if Opendoor sold this house for $480,000 it would be reported as a 20K loss, when in reality it was a 25K profit.

Hard to imagine why they would want to show a profit as a loss .... stock is DOWN over 75% YTD. Who benefits??

 

[retire202052]

Hard to imagine why they would want to show a profit as a loss .... stock is DOWN over 75% YTD. Who benefits??

I would imagine most stocks are down YTD and when a stock price is single digits, 75% is easy to obtain up or down, as oppose to Crypto.

From a legal accounting principle, the legal sales price is the number that has to be used. So if 42% of Opendoor homes are sold below this number (minus sellers fees, closing costs and repairs), then 58% are sold above this number, which is amazing.

 

[USGrant1962]

WaPo has an interesting data analysis today, but behind the paywall.

For those that can access it. https://www.washingtonpost.com/busi...ng-housing-market/?itid=hp-top-table-main-t-5

They analyzed Redfin time on market data for the last 10 years showing the pandemic demand bubble. Then they have a map and table of current housing market "cooling". Bottom line is the Boston-DC-Chicago belt is relatively stable, while southern and western regions are cooling and in many popular areas cooling fast.

“The regional housing markets that got the most overheated have the most to cool off,” said Eric Finnigan, director at John Burns Real Estate Consulting.

Ali Wolf, chief economist at Zonda, said markets that offered an escape and change of scenery during the early pandemic period were a magnet to new residents from around the country. Cities in the Southeast, Southwest, Mountain West, and suburban California were considered pandemic “winners” because of the massive influx of demand. But as interest rates continued to rise, buyers found themselves priced out of the market, Wolf said.

 

[MJ]

I've been looking for a house in the Greater Atlanta area for almost 3 months and the gauging is reversing big time. I saw a property early this week, that I might pay MAYBE $300-310K based on the condition. It was bought by Opendoor in early June for $332K and they made no improvements that I could see. They listed it for $385K in July. When I saw it this week, it was down to $363K. Today, it dropped another $9K. I'm in a good position in this higher interest rate market because after I take out a loan, I'll probably be paying it off in early 2024 when a few CDs mature. I would consider paying cash but so far, it looks like there is still no advantage for me to do that.

 

[Fermion]

I have a feeling real estate is going to crash pretty hard soon. The stock market is almost back to pre covid levels (S&P500 at least) and housing should follow that.

 

[aja8888]

I have a feeling real estate is going to crash pretty hard soon. The stock market is almost back to pre covid levels (S&P500 at least) and housing should follow that.

My friend, a RE broker said this morning at coffee he has convinced his listing owners to drop prices if they want to sell. And he said no new inventory is becoming available.