Price of homes sort of shocked me

[dixonge]

Our first home - bought it for around $65K (1130 sq ft) back in 1997, currently showing value of $221K on Zillow. Everything on that Court is in the $186-284K range. Almost all older homes originally built in the 50's/60's for people working at Bell Helicopter.

Our second home - had it built in 2004 for around $160K (2058 sq ft). Neighborhood has since incorporated as a town, northern end of the mass expansion out of N. Dallas up the Tollway. Had to walk away from it in 2010 as it was way underwater and we were preparing to retire. Took years before it resold under foreclosure. It only recently recovered to its original value, but is now showing value of $325K on Zillow.

 

[MrBojangles]

Crazy inflation is due to many factors, such as corporate buyout of homes and apartments, price of materials, and lack of new building in growing, high demand areas.

It's also why many young adults are living in their parents' homes. Absolute necessity for survival. I'm watching my neighbor's "kid" grow an internet business out of his parents' home. He's going to need a warehouse before too long. All their kids are in the home, though the youngest is in college. My son too. And my nephew in Washington State. You have to have an insane income to afford anything in much of the country. I'm grateful I found this house when I did.

This isn’t the first generation forced to live in a basement. Mine did as well.

Why? Underemployment and everything is so incredibly expensive in this country.

It just reiterates what I’ve said all along. Pay folks handsomely, beginning right out of college. Like $300k a year to start. We are a wealthy nation, we should be living as such. Corporate profits are at record highs, there’s no reason why they shouldn’t be sharing the wealth.

The proliferation of billionaires out there who really don’t need yet another billion explains why Junior is living in your basement.

 

[Mr._Graybeard]

Crazy inflation is due to many factors, such as corporate buyout of homes and apartments, price of materials, and lack of new building in growing, high demand areas.

It's also why many young adults are living in their parents' homes. Absolute necessity for survival. I'm watching my neighbor's "kid" grow an internet business out of his parents' home. He's going to need a warehouse before too long. All their kids are in the home, though the youngest is in college. My son too. And my nephew in Washington State. You have to have an insane income to afford anything in much of the country. I'm grateful I found this house when I did.

I like the vlogging of Ray Delahanty, aka Citynerd. Here's a video he did on the NIMBY-est cities in America -- where housing development has deliberately not kept pace with demand. An interesting point is that most are in coastal California.

 

[Badger]

It's NUTS.
According to Zillow the price of houses on our street range from $1.4 - 5.0 Million. Almost all have been built in the last 8-15 yrs. Our house is the least expensive but then I bought it 40 yrs ago. At that time it was already 30 yrs old. Many of the houses have property taxes each yr. that are as much or more than what I paid to buy my house.
It is starting to sound like 2006 before the crash. I'm glad I am not in the market to buy. I'm not even in the market to sell because taxes would go through the roof. If everything works out then I will most likely die in my house and the grown children can sell it at the new basis.

 

[jkern]

We started building our home here in eastern Washington (small town) during COVID as something to do. At the time there were several older small homes in the town that were for sale in the low $100s (around $120,000 to $150,000 for something like 1200 sq-ft built in 1910s to 1960s). Probably had issues but nice lots and not total teardowns.

Now, just five years later when I scan the listings, the cheapest thing I see is a 870 sq-ft 2bd house for $285,000. I was talking to a neighbor, who has a nice house built in the 1990s that is probably 2500 sq-ft, very nice landscaped yard. He is thinking of selling it and I mentally thought $500,s but he said he was thinking of listing it at $650,000.

This has all really snuck up on me. I mentally thought our 1600+ sq-ft house was probably worth about $250,000 (which is about what the materials have cost us) but now I think I am lowballing. I figured builders get massive discounts on things.

I do wonder in our small town how people can afford $650,000 and what type of neighbors we might get. My wife wants me to talk him into listing it for $725,000, pointing out a new 2023 1740 sq-ft 3brm at the golf course on a bare lot is listed at $645,000. I guess she thinks $725,000 would be in the realm of nice older couple.

Things got pricey.

I grew up in San Mateo. While your area wasn't Hillsborough or Atherton it wasn't far behind (Los Altos Hills and Palo Alto).

 

[Midpack]

Several of our senior friends living in Chicago suburbs grew up with a family home on Lake Michigan. None of those homes are still in the family, all forced to sell as property taxes and insurance made them unaffordable even for homes they’d once owned outright. They would drive by the old lakeside family homes and tell us we once owned/lived there. I’m sure they made a tidy sum selling but…

Another buddy of mine is married to a woman who, along with her sister, inherited a small home in Sconset on Nantucket. He’s told us all that’s tge bulk of their estate/retirement nest egg, they plan to sell some day. Renting it out in summer pays taxes, etc. in the meantime. IIRC it’s 800 sf worth over $2M.

 

[JoeWras]

Why? Underemployment and everything is so incredibly expensive in this country.

It's not just this country (USA). It is widespread, although there are affordable pockets.

That makes it very interesting. For example, UK, Canada (especially BC and ON), Australia and much of Europe.

Look at New South Wales, Australia: average price $1214k (AUD) or USD $780k (*1)
BC: $963k (CAD) or USD $693k (*2)
ON: $861 (CAD) or USD 619k (*3)
Greater Toronto: $1100k (CAD) or USD $791k (*3)
UK as a whole: 265k (GBP) or USD $352k (*4)
Greater London UK: 684k (GBP) or USD $908k (*5)
USA as a whole: $508k (*6)

*1: Total Value of Dwellings, December Quarter 2024
*2: B.C. Housing Market: Vancouver, Surrey, and Others | WOWA.ca
*3: Ontario Housing Market: Apr. 22nd, 2025 Update | Interactive Map - WOWA.ca
*4: UK House Prices Graph & Data (From 1952 - 2024)
*5: House Prices in Greater London
*6: Average Sales Price of Houses Sold for the United States

 

[Mr._Graybeard]

Several of our senior friends living in Chicago suburbs grew up with a family home on Lake Michigan. None of those homes are still in the family, all forced to sell as property taxes and insurance made them unaffordable even for homes they’d once owned outright. They would drive by the old lakeside family homes and tell us we once owned/lived there. I’m sure they made a tidy sum selling but…

Another buddy of mine is married to a woman who, along with her sister, inherited a small home in Sconset on Nantucket. He’s told us all that’s tge bulk of their estate/retirement nest egg, they plan to sell some day. Renting it out in summer pays taxes, etc. in the meantime. IIRC it’s 800 sf worth over $2M.

A report I recently viewed said Nantucket is the fastest-growing county in Massachusetts in terms of population percentage growth. Speculation was that people are moving permanently into those old vacation homes.

 

[TickTock]

We've always lived in houses that were less than the traditional 2.5x annual gross income rule of thumb. Our current one, at what I estimate fair market value, was ~1.2x W2 income (so excluding any portfolio gains) when we retired. We didn't get serious about finance until 2002, but we always saved 10% in our 401(k)s and DW made it her mission to put as much possible into paying down the house mortgage (interest rates were much higher in those days - we refinanced with lower rates several times).

 

[Koolau]

Does the assessed value track well with market value? In some areas where we have owned I’ve had doubts.

I'm sure there are exceptions, but ours have been right on the money - based on sales within the building.

 

[flyoverstate]

I like the vlogging of Ray Delahanty, aka Citynerd. Here's a video he did on the NIMBY-est cities in America -- where housing development has deliberately not kept pace with demand. An interesting point is that most are in coastal California.

Interesting. Clearly the guy has never heard of Boulder, CO, which basically invented NIMBY in the 1960's with several policies designed to preserve the area. They have the "Blue Line", an elevation above which no city services will be extended (unless someone bribes them with millions), and "The Moat", a ring of open space around the city on which no development can take place (unless someone bribes them with millions). The entire county signed on, and now you have a pattern of open spaces, many of which are off limits to public use, between densely developed new areas and suburban tract homes from the 60's-80's.

Another way of preventing development while ignoring reality and claiming to be "green" is to invoke absolutely ridiculous building codes that do nothing but create a gauntlet of regulation to prevent anyone from building outside of a subdivision, while doing nothing to save energy, improve the liveability of the house, or help the local neighborhood. Do you want to know why a house can't be built for under $600K in Boulder County? Start with "LEED", and move on to IECC 2021. When you can't build a dwelling other than a giant styrofoam insulated box with required mechanical ventilation, fire sprinklers. 97 inches of insulation, limits on the number and size of windows, etc., what you get is ugly boxes that are priced at over $400/sq. ft.


It is a hilarious joke. Boulder is constantly hand wringing over the loss of the middle class in the area, while jacking up the cost of building every single year. To "compensate", they have a huge subsidized housing lottery where people making $100K/year are awarded houses they can afford, subsidized by taxpayers. The punch line is that the city and county have to pay more and more each year to build the subsidized housing, due to their own ridiculous overreach. More tax money needed, more building codes, more tax money.

I know California is very similar. At some point the madness has to end.

 

[YellowSubmarine]

Location, location, location.
I have two homes. Our Appalachian SE Ohio home we had built by Amish in 2012. We put 230k into it. Now it Zillowed at 330K. You can't built this house for that. However our FL home was purchased in 2014; and today it's up 100% + per Zillow. I think it's worth more as it could not be built for that estimate either. Point is location determines the value in most cases.

 

[Spock]

The market has definitely started to soften.
Dad passed away end February and I have to liquidate 4 SFR rentals in 2 different states to settle the estate.
AZ units are a race to the market as prices are dropping quick and I have to offer 3% "cash back" to compete against the new construction still in competition.
The market value of the 4 units is down approx 100K (combined) from a year ago.
Location Location Location.

 

[Finance Dave]

We've been scouting a few areas to move to and are finding we'll need to put up an additional $300k to get a similar house to ours.

We live in a low COL area in the midwest and are considering areas like Franklin TN, Mount Juliet TN, Cary NC, and Greenville SC. Franklin is the most pricey of those, but all are more expensive than where we live. But...they all get high marks in many areas...which is probably why they are expensive. We planned for the additional housing cost, so it's not surprising to us...but it would be nice if prices in those areas came down in the next year before we buy lol.

Property Taxes are yet another issue. Mt Juliet TN has MUCH lower taxes than Franklin TN due to being in different counties even though they are only 20 minutes apart and border each other.

The other thing we're finding is that much of the newer housing is in HOAs with high monthly fees...say $250-$400/mo. Yikes. We won't use most of the amenities so trying tp avoid those areas. If we pay a lot for the house, we can get it back when we sell...but HOA fees are not recoverable.

 

[yakers]

As I remember the great decline in Japan came from real estate becomming unaffordable. I understood that in the US a loan goal was 2.5 X annual income. I can see it rising to 3 or maybe 4 with savings and secure income but it got to be 10 X in Japan and is taking a generation to recover. If it is 8 X in the US now how can we not anticipate an 'adjustment'?

 

[CSdot]

Coastal SC here, and if we wanted to upgrade from our fully paid for $1.5M house that we bought in 2004 for $490k to a nicer home, the entry point to make the jump worthwhile would be north of $2.5M. As others have said, taxes and insurance, plus spending an extra $1M don't make the prospect of moving very inviting.

 

[flyoverstate]

Housing really is a slow motion trainwreck in real time.

Even in the middle of nowhere in our flyover state, the absolute cheapest house on the market is a wreck of a trailer, asking price $180k, on a 1700 sq. ft. (yes 1700 sq. ft.) lot. . I'm not even sure it is habitable. The least expensive actual house is $540k, built in the 70's, 2000 sq. ft. on a .4 acre lot. There is almost nothing for sale. I can look at the county website and see that many houses are selling without ever actually hitting the market. I think the new realtor arrangements are encouraging the concept of private listings. Realtors have "buyer lists", they suggest a price to the seller, and the house is sold before ever reaching MLS. In return, the seller pays 3% instead of 5-6%.

A friend's son lives in the Boston area and is buying. That is a whole 'nother level of "what in the heck." They are buying HALF of a house in a Boston suburb, the house is over 100 years old, the house was split top to bottom. Their half will be about 1600 sq. ft, one normal bedroom, two small bedrooms, 1 1/2 baths, no outside storage whatsoever, no garage, just a single parking space. $1 Million. Property taxes over $10K per year, HOA, $400/mo. That is a "starter home" in the Boston area.

 

[Route246]

Trouble is, that $5M house will command $60K/year in property taxes, and who knows how much in insurance. Even if a person had the cash, and were interested in ownership as a speculative route towards potentially heady capital gains, the carrying-cost alone, is eye-watering... and hard to square with the frugality inherent in the FIRE mindset.

In our case in CA we are trading up and transferring some of the property tax basis from our current home assuming we sell within 2 years. Our property tax on our current home is discounted $15K from market due to Prop 13. Because of Prop 19 we can transfer that discount to the new property. Once we are done the house should be assessed somewhere near 5M for 50K property tax. We will be assessed for 35K property tax eventually. Wife and I agreed we will set aside SS for property tax and insurance for bookkeeping purposes. SS should cover everything. RMD and MM should cover our cash flow. We don't live extravagantly, we just live in a neighborhood which has high property value. We like it. There are no flashy homes or mansions here, mostly mid-century ranch-style homes on 1/4 acre lots on the outer fringe of Silicon Valley. If you drove through or looked at it on Street View it would not stand out in a crowd of two. If you look closely you will see slightly larger than average homes, well-kept and well-landscaped yards, no sidewalks or streetlights and best of all, no traffic or noise. There are only a few gated homes and "estate" properties but mostly higher-income working class dwellings. The crime rate is minuscule but still there, the neighbors, although not chummy are friendly and it is easy to strike up conversations, it's just everyone has their own life and are busy with that. The striking thing is there are virtually no cars parked on the street at night. No rentals, no houses with multiple adults sharing, plenty of space in garages and driveways to park vehicles and 10' side setbacks so people can park their RVs and boats in the side and backyard if necessary.

But, as an entire city it is very expensive compared to anywhere else in the developed world.

 

[engineernerd]

I do wonder in our small town how people can afford $650,000 and what type of neighbors we might get.

According to the National Association of Realtors, the median age of home buyers was 56 in 2024, an all-time record high. And the percent of homebuyers who were first-time buyers was a record-low 24%. Link here:

Highlights From the Profile of Home Buyers and Sellers

For most home buyers, the purchase of real estate is one of the largest financial transactions they will make.

www.nar.realtor

So basically only people who can SELL a ridiculously-overpriced home can afford to BUY a ridiculously-overpriced home.

Because news reporting has been so degraded, we are all left to guess at what is driving this phenomenon. IMHO, plausible contributors include:
(1) Large companies that have been buying low-end homes en masse and turning them into rentals.
(2) The explosive growth in homes converted to short-term rentals (air-bnbs).
(3) In certain cities, a large number of rich Asians have bought homes (mostly condos) that they just hold vacant, to shelter their wealth from possible government confiscation.

One thing it doesn't seem to be is a failure of housing units to keep up with number of households, at least not as the official stats appear to this uneducated eye.
Housing Units: Housing Inventory Estimate: Total Housing Units in the United States
Households: Total Households

 

[flyoverstate]

So basically only people who can SELL a ridiculously-overpriced home can afford to BUY a ridiculously-overpriced home.

Because news reporting has been so degraded, we are all left to guess at what is driving this phenomenon. IMHO, plausible contributors include:
(1) Large companies that have been buying low-end homes en masse and turning them into rentals.
(2) The explosive growth in homes converted to short-term rentals (air-bnbs).
(3) In certain cities, a large number of rich Asians have bought homes (mostly condos) that they just hold vacant, to shelter their wealth from possible government confiscation.

One thing it doesn't seem to be is a failure of housing units to keep up with number of households, at least not as the official stats appear to this uneducated eye.
Housing Units: Housing Inventory Estimate: Total Housing Units in the United States
Households: Total Households

I agree with your first point that only people who can sell an overpriced property can afford to buy one. It is hell for first time buyers.

Your next three points apply in some areas, but where we live in the middle of freaking nowhere, they don't really apply, at least not completely.

1. Where we live, there are a lot of properties being turned into rentals, but the owners are locals who have equity in farms and the like. They mortgage the farms to the hilt, and buy multiple houses in town as rentals. They hire someone to run the farm on a break even basis. Land here constantly rises, so they can borrow more every few years. In the endgame, they cash out the farm and move somewhere else and live off of the rental income of the houses. Whenever I read stories or opinions about how we need legislation to prevent "big companies" from buying up houses, I know that would make zero difference here.

2. STRs are a big problem in some places, but here there are very few. I know some resort areas in Colorado and Utah are now limiting the number of STRs.

3. Ummm. No. That is a California thing I think.


The driver of the housing shortage and price explosion here are:

1) Retirees fleeing urban areas by cashing out on their homes in Colorado, Utah, and California and moving to a nice rural area. (We are guilty of this.)

2) Work from home professionals moving in now that great internet is available.

3) A *massive* lack of new building due primarily to a lack of water, but also a lack of builders and labor. There is a huge labor shortage in all slices of the economy here. Skilled, unskilled, professional. It is a chicken or egg circular conundrum. Water sources can't be expanded without a bigger tax base, the tax base can't grow due to an unavailability of housing and commercial properties, the new properties can't be built due to labor shortages and a lack of water. If this were a small town in Nebraska, it would be drying up and blowing away, but because of the beauty and access to outdoor activities, it attracts retirees and work from home people, who buy the houses and drive up the prices, driving out the lower paid workers, making the labor shortage even worse.

 

[Fermion]

The solution in our area (which is horrible imo) seems to be very tiny lots that are leased out with a new single wide 950 sq-ft mobile home on it. There are currently three up for sale, new, at about $120,000 each. This is in the area of town that is a bit run down, near the Walmart.

In the sale listing, it says lot rental is $550 a month. So that is $7,000 a year for the lot. Figure a 8% loan on the 120,000, that is $9,000 a year.

So $16,000 a year for that? And you are not building up any long term equity because the mobile home will be negative value teardown in 15 years the way they are built now (there are currently 4 in that area that are being torn down with excavators right now).

 

[jsncpa]

It just reiterates what I’ve said all along. Pay folks handsomely, beginning right out of college. Like $300k a year to start. We are a wealthy nation, we should be living as such. Corporate profits are at record highs, there’s no reason why they shouldn’t be sharing the wealth.

The proliferation of billionaires out there who really don’t need yet another billion explains why Junior is living in your basement.

Want to see REALLLY stupid home prices? Do that.

There's no collective "they" who decides these things, you know. There's this free market thing. It's worked well for a long time. The longer it works, the more it seems some folks prefer other systems. Weird, wild stuff.

 

[engineernerd]

1. Where we live, there are a lot of properties being turned into rentals, but the owners are locals who have equity in farms and the like. They mortgage the farms to the hilt, and buy multiple houses in town as rentals. They hire someone to run the farm on a break even basis. Land here constantly rises, so they can borrow more every few years. In the endgame, they cash out the farm and move somewhere else and live off of the rental income of the houses. Whenever I read stories or opinions about how we need legislation to prevent "big companies" from buying up houses, I know that would make zero difference here.

3) A *massive* lack of new building due primarily to a lack of water, but also a lack of builders and labor. There is a huge labor shortage in all slices of the economy here. Skilled, unskilled, professional. It is a chicken or egg circular conundrum. Water sources can't be expanded without a bigger tax base, the tax base can't grow due to an unavailability of housing and commercial properties, the new properties can't be built due to labor shortages and a lack of water. If this were a small town in Nebraska, it would be drying up and blowing away, but because of the beauty and access to outdoor activities, it attracts retirees and work from home people, who buy the houses and drive up the prices, driving out the lower paid workers, making the labor shortage even worse.

Interesting! The farmland appreciation sounds kind of bubble-like to me. Especially if the water issues can't be solved, which is broadly true in the desert Southwest. You don't say which state you are in, but I think Arizona will need to pay California to build desalination capacity and stop drawing from the Colorado River so Arizona can take over their share.

 

[MrBojangles]

According to the National Association of Realtors, the median age of home buyers was 56 in 2024, an all-time record high. And the percent of homebuyers who were first-time buyers was a record-low 24%. Link here:

Highlights From the Profile of Home Buyers and Sellers

For most home buyers, the purchase of real estate is one of the largest financial transactions they will make.

www.nar.realtor

So basically only people who can SELL a ridiculously-overpriced home can afford to BUY a ridiculously-overpriced home.

Because news reporting has been so degraded, we are all left to guess at what is driving this phenomenon. IMHO, plausible contributors include:
(1) Large companies that have been buying low-end homes en masse and turning them into rentals.
(2) The explosive growth in homes converted to short-term rentals (air-bnbs).
(3) In certain cities, a large number of rich Asians have bought homes (mostly condos) that they just hold vacant, to shelter their wealth from possible government confiscation.

One thing it doesn't seem to be is a failure of housing units to keep up with number of households, at least not as the official stats appear to this uneducated eye.
Housing Units: Housing Inventory Estimate: Total Housing Units in the United States
Households: Total Households

This is, by no means, healthy for the economy.

You sell something overpriced to buy something even more overpriced Not good for younger generations. And, it’s the only reason I can even consider buying something else—because I already own a place that would be much, much more painful to buy today if I had to buy it now.

I don’t know where all this money came from now, salaries didn’t increase exponentially over the last 10 to 15 years, but housing prices sure did. Where were all these potent buyers then? From about 2010 to 2015 you couldn’t give a property away.

 

[flyoverstate]

Interesting! The farmland appreciation sounds kind of bubble-like to me. Especially if the water issues can't be solved, which is broadly true in the desert Southwest. You don't say which state you are in, but I think Arizona will need to pay California to build desalination capacity and stop drawing from the Colorado River so Arizona can take over their share.

The farmers are the ones who own the water, it is the cities and towns that need it. At some point, it is worth it to "buy and dry", so municipalities buy farms, send the water to the city often hundreds of miles away, and then sell the farm without water. Since nothing grows without irrigation, the field becomes a barren wasteland. Farmer retires to Hawaii, someone gets a farmhouse and a bunch of weeds, city gets a few more subdivisions. The local economy suffers, because the farmer isn't buying seed/fertilizer/tractors, etc. So far, this has mostly happened in Eastern Colorado. Western Colorado has avoided this for the most part, but there are hedge funds buying ranches in the Colorado Basin for the water now, even though technically it is illegal to speculate on water in Colorado. The hedge funds have the means to wait it out, so they claim they bought the farms and ranches to run them as investment farms and ranches, while they wait for a desperate governmental entity to come asking for the water rights.

There is a water war brewing right now involving the Colorado River. In a nutshell, everyone will have to use less water in the future. The fight is over how much each party suffers, but the bottom line is that *everyone* using water out of the Colorado Basin is going to suffer. It may ultimately end up in the Supreme Court.

Whiskey is for drinking, water is for fighting over.