Price of homes sort of shocked me

[Route246]

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.

Just watched Chinatown again last weekend. One of Nicholson's greatest performances.

 

[engineernerd]

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.

I started reading Marc Reisner's Cadillac Desert, but couldn't stomach finishing it because of the breathtaking corruption that seemed to be on every page. Yet there was a real can-do attitude in the old days that we might benefit from today. Something tells me the day will come sooner than we think when we will regret cannibalizing our farming capabilities in the fight to share a shrinking pie, instead of boldly expanding that pie.

 

[EarlyandLate]

I guess another factor is second home ownership. My condo building here in Atlanta (not exactly a resort area, ha ha) has 6-10% of the units un/under-occupied. I know the story on some of the units. There is one couple who live "full time" in Florida. Their grand kids are here, so they come up occasionally for a dose of the grand kids and then head back to FL. There's another couple who live in the NC mountains. Her very elderly mother lives here and they come about one weekend a month to check on her. Another unit was purchased by a local man during covid to use as his work from home office. For the last couple of years it has sat empty. The annual expenses for this building are not trivial. I suppose these folks are wealthy enough to not care.
I guess my point is, if you multiply this phenomenon over all the condo buildings in Atlanta, that's a lot of units!!
Edit to add: None of those folks lived in this building full time before. They purchased the units specifically for the reasons I gave.

 

[engineernerd]

The question is, how many units were un/under-occupied 20, 30, 40 years ago? In another time, the newspaper or network TV news would have researched that and produced something satisfyingly full of relevant hard facts...now there are only stupid articles claiming that supply isn't keeping up so we need to build more homes. Maybe true, but I notice in my neighborhood nobody is stepping up to build AFFORDABLE homes. The new builds are all absolutely huge, maximizing the footprint, height, etc. allowed in the zoning code and by the HOA, making the existing homes around them look quaint and cute, and listing for a lot of money.

Given what we know about trends in income and wealth inequality, it's likely second-home ownership is indeed on the increase but how much that or anything else is contributing to price increases seems to be unknown.

 

[flyoverstate]

The question is, how many units were un/under-occupied 20, 30, 40 years ago? In another time, the newspaper or network TV news would have researched that and produced something satisfyingly full of relevant hard facts...now there are only stupid articles claiming that supply isn't keeping up so we need to build more homes. Maybe true, but I notice in my neighborhood nobody is stepping up to build AFFORDABLE homes. The new builds are all absolutely huge, maximizing the footprint, height, etc. allowed in the zoning code and by the HOA, making the existing homes around them look quaint and cute, and listing for a lot of money.

Given what we know about trends in income and wealth inequality, it's likely second-home ownership is indeed on the increase but how much that or anything else is contributing to price increases seems to be unknown.

Lack of new affordable single-family homes is an issue almost everywhere. Builders maximize their profit. Building a 1200 sq. ft. house makes no sense if a 2400 sq. ft. house will fit on the lot, since the marginal costs of going from 1200 to 2400 are small, while the selling price is much more. Unless market forces dictate that 1200 sq. ft. houses are all that anyone can afford, the 2400 sq. ft. houses get built. Since there is a shortage of over 4 million houses, the market forces skew the builds, and there is no way out of that other than building millions more houses, which the US and Canada seem to be unable to do.

The single family starter home affordable to someone in their 20's is now rent an apartment until you are 35 and can buy maybe swing a condo. Hold off on kids or don't have them until your 40's or 50's when you *might* be able to score a single family home. Or not. With all due respect to those raised in apartments or condos, I personally would not want to have a kid if I couldn't afford a SFH. Apparently I am not alone, looking at the rapidly declining birthrate.

The American Dream as we knew it is dead.

 

[Route246]

I only have a few words to describe this, absurd and unbelievable. The sad thing is that it will most likely go pending soon and sell for at or above list price. The flippers must be frothing at the mouth now.

Palo Alto $5.52M, 2747 sq ft on a 6125 sq lot. I'm not sure how they got this approved as it is a single story home sitting on a micro-lot.

The Street View before it was torn down is here.

This is not what you would call a "fancy" neighborhood, many old 1BA bungalows with a single car garage.

 

[Time2]

I was looking at a chart of that recently. Average historical range of housing cost is roughly 4x a person's average salary. Right before the housing crisis of 2009 we got to 7x. Today we stand at over 8x. Goldman had the chart but I can't readily find it.

I found this, US House Prices Vs Wages - TimeTrex.
It shows in 1963 the ratio was 4.4, in 1984 it was 6.0, in 2004 it was 7.6 and in 2022 it was 8.1.
In our case we bought in 1984, our ratio was 1.4.
Edit: I decided I should put some numbers with that, so you don't think a high income skewed the ratio.
$33,000 home on a $26,500 income.
Btw, for a couple years, I was so happy, my high earning kid and husband were in a fixer upper with $300k into it on a $300k income. I thought they had an easy in to FIRE. A hurricane damaged the house, rather than repairing it, they are demolishing it and building a new bigger, more expensive home. I don't know the price, but I suspect in the $600k range. Oh well, it is their life.

 

[CO-guy]

You can’t buy in my neighborhood for less than a million. Just prior to Covid it was half that.

We had an appraisal prior to Covid to get a HELOC and quickly finish off an ADU. The appraisal in 2019 came in at $575K for our 5br/3.5ba home. While there's now a finished ADU above the garage, in the past year we've received three unsolicited all-cash offers on our home. The lowest was $1.4M.

 

[COcheesehead]

We had an appraisal prior to Covid to get a HELOC and quickly finish off an ADU. The appraisal in 2019 came in at $575K for our 5br/3.5ba home. While there's now a finished ADU above the garage, in the past year we've received three unsolicited all-cash offers on our home. The lowest was $1.4M.

Welcome to Colorado

 

[CO-guy]

Welcome to Colorado

Our home sits on 4 lots in the middle of town that are zoned multi-family residential. When we purchased the property 15 years ago, we valued the land at $225k and the home at $70K. Last summer someone paid $1.2M for a tear-down on 4 lots down the street from us and are now building luxury townhomes. Other 2br/2a townhomes in town are now selling for over $700k each, so the reason this is happening is obvious.

 

[COcheesehead]

Our home sits on 4 lots in the middle of town that are zoned multi-family residential. When we purchased the property 15 years ago, we valued the land at $225k and the home at $70K. Last summer someone paid $1.2M for a tear-down on 4 lots down the street from us and are now building luxury townhomes. Other 2br/2a townhomes in town are now selling for over $700k each, so the reason this is happening is obvious.

When I lived in Denver, in certain parts of town, you could buy a half million dollar home, tear it down, build a million plus dollar home on the lot and turn a profit on a flip. I now see similar things where we live in the western half of the state. If you are in the market, you’re benefiting. If not, you’re seeing RE run away from you.

 

[Time2]

One of my kids paid $230k for a fixer upper house in Aug 2021, after remodeling they had $300k into it. A few years later a hurricane did a lot of water damage, (it's on a canal). Instead of repairing they are demolishing and building a new home. Part of the financing was to appraise the lot. In April 2025 the lot only was appraised at $300k. This is in the Bradenton Fl. area. The new home will be raised, to prevent damage from another water surge.

 

[CO-guy]

When I lived in Denver, in certain parts of town, you could buy a half million dollar home, tear it down, build a million plus dollar home on the lot and turn a profit on a flip. I now see similar things where we live in the western half of the state. If you are in the market, you’re benefiting. If not, you’re seeing RE run away from you.

Real estate in places like Aspen, Telluride and other ski towns really blew up in the late-70s and early-80s. However, it wasn't until much more recently that nearby towns like Basalt and Carbondale near Aspen seem to have really taken off. A friend bought a large historic home in downtown Glenwood Springs less than 10 years ago that had been abandoned. He's sitting on a goldmine now. Heck, the last time I was in Telluride I noticed that they were building luxury townhomes in Sawpit halfway up the hill from Placerville. Barely 10 years ago that rusty place was full of abandoned vehicles, trailers and mobile homes. Same with Leadville. Both north and south of historic downtown Leadville, trailer parks are being replaced with higher-end high-density residential.

 

[flyoverstate]

Real estate in places like Aspen, Telluride and other ski towns really blew up in the late-70s and early-80s. However, it wasn't until much more recently that nearby towns like Basalt and Carbondale near Aspen seem to have really taken off. A friend bought a large historic home in downtown Glenwood Springs less than 10 years ago that had been abandoned. He's sitting on a goldmine now. Heck, the last time I was in Telluride I noticed that they were building luxury townhomes in Sawpit halfway up the hill from Placerville. Barely 10 years ago that rusty place was full of abandoned vehicles, trailers and mobile homes. Same with Leadville. Both north and south of historic downtown Leadville, trailer parks are being replaced with higher-end high-density residential.

Telluride has moved all of the way down to Montrose. They bus workers from Montrose to Telluride, about 1:30 each way.

Carbondale, which used to be the town where the Aspen workers lived, has been replaced by Rifle/Silt/Parachute west on I-70, a brutal commute done by thousands every day. Even worse, there are people commuting from Paonia to Carbondale, 1:15 over twisty McClure Pass, and THEN getting on a bus to go another 45-60 minutes to Aspen. No one would have considered that 15 years ago.

Glenwood Springs has traffic jams every morning and evening as workers move from the commuter towns on I-70 to Aspen and back.

There is now a lot of housing in Dotsero, some of those families have one person working in the Vail valley, and the other in the Roaring Fork valley.

I-70 from Silverthorne to Parachute is now solid development with the exception of the areas that are public lands. Stay tuned, there are proposals to sell the public lands in that corridor for development.

Leadville is an interesting situation. It was nearly a ghost town 35 years ago. Now, it is a commuter village for Summit County. We almost bought a house on a couple of acres out by Turquoise Lake in 1990, it was $40,000.

 

[imjustawarrior]

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

In my area I see the NIMBY mentality preventing growth. Once people are in they try to shut the door behind them. There are also codes/laws that drive up costs and limit growth. Housing becomes unaffordable for many, then they whine about no affordable housing. Also, the cities start surrounding themselves with natural areas to limit growth to shut the door.

 

[yhoomajor]

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.

Sorry, Residential Real Estate market is not Free market. Not by any stretch. If you take out the Government backing of Mortgages, majority of housing market will revert to affordable level.
Anytime Government is involved in back-stopping, its not a free market.

 

[jsncpa]

Sorry, Residential Real Estate market is not Free market. Not by any stretch. If you take out the Government backing of Mortgages, majority of housing market will revert to affordable level.
Anytime Government is involved in back-stopping, its not a free market.

Completely irrelevant given the "thought" I was addressing. Reading is fundamental.

 

[Fermion]

Completely irrelevant given the "thought" I was addressing. Reading is fundamental.

Actually you were saying free market was the current system and I think he was saying there are a lot of non-free market things going on in the current housing market.

I also think that things like California's Prop 13 is not a free market device. Having a home taxed differently from an identical home right next to it is not free market at work.

 

[CO-guy]

Telluride has moved all of the way down to Montrose. They bus workers from Montrose to Telluride, about 1:30 each way.

Carbondale, which used to be the town where the Aspen workers lived, has been replaced by Rifle/Silt/Parachute west on I-70, a brutal commute done by thousands every day. Even worse, there are people commuting from Paonia to Carbondale, 1:15 over twisty McClure Pass, and THEN getting on a bus to go another 45-60 minutes to Aspen. No one would have considered that 15 years ago.

Glenwood Springs has traffic jams every morning and evening as workers move from the commuter towns on I-70 to Aspen and back.

There is now a lot of housing in Dotsero, some of those families have one person working in the Vail valley, and the other in the Roaring Fork valley.

I-70 from Silverthorne to Parachute is now solid development with the exception of the areas that are public lands. Stay tuned, there are proposals to sell the public lands in that corridor for development.

Leadville is an interesting situation. It was nearly a ghost town 35 years ago. Now, it is a commuter village for Summit County. We almost bought a house on a couple of acres out by Turquoise Lake in 1990, it was $40,000.

It can't possibly be like this everywhere, right? Is this type of situation happening in other resort areas elsewhere in the US?

 

[ponyboy]

Homes are expensive and unaffordable in some areas. In other areas, they are affordable. People need to start moving from hcol locations. Plenty of homes near my location in the northeast. They are affordable and you can get an acre or so.

If you really want to splurge you can pay $500k and get a 3000sf house on 20 acres.

What do people expect prices to be in a happening area?

 

[MrBojangles]

Homes are expensive and unaffordable in some areas. In other areas, they are affordable. People need to start moving from hcol locations. Plenty of homes near my location in the northeast. They are affordable and you can get an acre or so.

If you really want to splurge you can pay $500k and get a 3000sf house on 20 acres.

What do people expect prices to be in a happening area?

Where in the northeast?

 

[flyoverstate]

Homes are expensive and unaffordable in some areas. In other areas, they are affordable. People need to start moving from hcol locations. Plenty of homes near my location in the northeast. They are affordable and you can get an acre or so.

If you really want to splurge you can pay $500k and get a 3000sf house on 20 acres.

What do people expect prices to be in a happening area?

The problem in Colorado is that in the "happening" areas, the billionaires are pushing out the mega-millionaires, and then the mega-millionaires go down valley and push out the millionaires, and it caroms on down the line. Trust me, places like Silt (Slogan: "Silt Happens"), Parachute (which changed it's name in the late 60's from Grand Valley to try to escape the stigma of a nearby underground nuclear test debacle) and Dotsero (which was literally the dot on the map that the railroad used as zero miles on the rail line ("Dotzero" or .0), are kind of the opposite of "happening". They now just happen to have the cheapest land available to put up thousands of worker accommodations. They are kind of the last places close enough to resort areas, that can possibly be developed for workers. Except wait, Carbondale was that town 20 years ago. Now it is Parachute. In 20 more years I guess people will commute 130 miles each way from Grand Junction?

There is an RV campground right on I-70 near Gypsum that we used to laugh about. Who wants to camp next to the interstate? Now we realize that it is actually people living full time in their RVs, and working in Vail. It has been bought by a private equity firm that is building a few more RV sites, and over 170 tiny homes that will sell for.........wait for it............ $500k each. For a tiny house. In an RV park. On the interstate. And you have to pay lot rent.

Even in non resort areas, things are ridiculous. The median price of a house in Boulder is now $1.3 Million, and most of the houses under $1 Million are mid-century tract houses that are wrecks, in neighborhoods where 80% of the houses are student rentals.

At what point does the madness end?

 

[MrBojangles]

The problem in Colorado is that in the "happening" areas, the billionaires are pushing out the mega-millionaires, and then the mega-millionaires go down valley and push out the millionaires, and it caroms on down the line. Trust me, places like Silt (Slogan: "Silt Happens"), Parachute (which changed it's name in the late 60's from Grand Valley to try to escape the stigma of a nearby underground nuclear test debacle) and Dotsero (which was literally the dot on the map that the railroad used as zero miles on the rail line ("Dotzero" or .0), are kind of the opposite of "happening". They now just happen to have the cheapest land available to put up thousands of worker accommodations. They are kind of the last places along I-70 close enough to resort areas, that can possible be developed for workers.

There is an RV campground right on I-70 near Gypsum that we used to laugh about. Who wants to camp next to the interstate? Now we realize that it is actually people living full time in their RVs, and working in Vail. It has been bought by a private equity firm that is building a few more RV sites, and over 170 tiny homes that will sell for.........wait for it............ $500k. For a tiny house. In an RV park. On the interstate.

Even in non resort areas, things are ridiculous. The median price of a house in Boulder is now $1.3 Million, and most of the houses under $1 Million are mid-century tract houses that are wrecks, in neighborhoods where 80% of the houses are student rentals.

At what point does the madness end?

I’ve never understood the allure of Colorado. I recall when I graduated high school in 1988 a bunch of potheads in my class all moved there, presumably to smoke pot all day. Was it legal there then? Not sure what any of them are doing now, smoking pit for 37 years might get old after awhile and presumably there were a few careers in there along the way.

 

[Aerides]

Homes are expensive and unaffordable in some areas. In other areas, they are affordable. People need to start moving from hcol locations. Plenty of homes near my location in the northeast. They are affordable and you can get an acre or so.

If you really want to splurge you can pay $500k and get a 3000sf house on 20 acres.

What do people expect prices to be in a happening area?

But HCOL is often for a reason. LCOL areas aren't near to strong high paying job markets. It's not remotely as simple as "move to this cheap place" if you need to show up every day and make a good salary.

 

[MrBojangles]

But HCOL is often for a reason. LCOL areas aren't near to strong high paying job markets. It's not remotely as simple as "move to this cheap place" if you need to show up every day and make a good salary.

That’s the huge problem in this country. I’ve never been able to work remotely. When I got out of college I planned on working remotely because there were no good jobs where I lived, and I thought, that’s not my problem, my employer will have to deal with it. Well, it was my problem. During COVID, employers were starting to become sensible and allow work to be remote, and folks can live anywhere, but now they have backpedaled. You can blame overdevelopment and HCOL areas on rigid managers and companies that value productivity over one’s lifestyle.