Real Estate Bubble?

[Retireby45ish]

It’s insanity! If this continues normal people who don’t already own will be priced out of any house. How is that even possible?

I hope this madness ends because I’m sure there are some sad renters out there.

We just sold (full ask in 2 days…and asking 30% more than we paid 3 years ago) and one can’t help but feel the pressure to buy before things go up another 10-30% in the next few months. We wanted to move geographic areas for personal reasons.

Irrational FOMO at its worse.

 

[Joylush]

It’s insanity! If this continues normal people who don’t already own will be priced out of any house. How is that even possible?

I hope this madness ends because I’m sure there are some sad renters out there.

We just sold (full ask in 2 days…and asking 30% more than we paid 3 years ago) and one can’t help but feel the pressure to buy before things go up another 10-30% in the next few months. We wanted to move geographic areas for personal reasons.

Irrational FOMO at its worse.

Absolutely insane. I listed one last Friday for 298K that I paid 87K for in 2012. By Sunday we had 15 offers, all but one over asking price. I chose the highest cash offer of 355K. Never in my wildest dreams did I think it would be selling for so much let alone 57k over asking.

I literally sold a larger house right across the street from this one that had more updates in Feb/2020. That was at the start of Covid when less people were buying. That one sold for 222K and took longer to sell.

Prices had been rising but not like they have over this past year. This is Florida and it is crazy.

And to think I offered the one I just sold to the tenants who were there in October for 235K. I feel very lucky they said no because they didn’t think it was big enough to buy. Almost made a 120K mistake.

 

[Fermion]

This isn't going to end well but I am unsure how to profit off of it.

It isn't like March 2020 when you could predict somewhat that COVID was going to spread around the world and cause problems.

How do you buy a put on the housing market?

 

[chassis]

This isn't going to end well but I am unsure how to profit off of it.

It isn't like March 2020 when you could predict somewhat that COVID was going to spread around the world and cause problems.

How do you buy a put on the housing market?

Buy residential construction-related stocks. Building materials, logistics, transportation, home systems.

When won't it end well? What will be the reason it doesn't end well? What is "it"?

 

[W2R]

It’s insanity! If this continues normal people who don’t already own will be priced out of any house. How is that even possible?

I hope this madness ends because I’m sure there are some sad renters out there.

+1

It's heartbreaking for so many.

Frank and I are lucky, in that we have no reason to move and plan to stay in our homes as long as possible. But wow, my heart goes out to those who need to move, whether for family reasons, work reasons, downsizing for retirement, and so on. Most of us have "been there done that" and know how difficult life can be.

 

[Joylush]

+1

It's heartbreaking for so many.

Frank and I are lucky, in that we have no reason to move and plan to stay in our homes as long as possible. But wow, my heart goes out to those who need to move, whether for family reasons, work reasons, downsizing for retirement, and so on. Most of us have "been there done that" and know how difficult life can be.

Well if you have a house to sell at top dollar you can buy another one at top dollar, even if downsizing. The ones it hurts the most are first time buyers and renters. I believe one of the contributing factors is the poorly thought out illegal eviction moratorium is a contributing factor.

I am fortunate to have a lot of homes to sell. For those I might keep I can no longer keep them at rents so far below current market value because the costs of everything has greatly increased (taxes, insurance, and all labor and materials cost for maintenance). So I plan to get out while the getting out is good. Having the government take away my rights to my property for over a year was just too much. And now my very good tenants will all be affected one way or the other. Then again the government never considers long term consequences. It absolutely pains me.

 

[snowboarder]

Don't forget that a lot of people are on mortgage forbearance at this time. They have been granted a reprieve from paying for the past year or so. At some point banks are going to demand payments, so these people will have to sell their homes or foreclose if they can't resume payments.

 

[Joylush]

Don't forget that a lot of people are on mortgage forbearance at this time. They have been granted a reprieve from paying for the past year or so. At some point banks are going to demand payments, so these people will have to sell their homes or foreclose if they can't resume payments.

Well of course. Banks are not free housing providers nor are landlords. But our system has turned them into that. And those owners and tenants who refuse to pay may have been housed for free for a year but will have more difficulties in the future renting or getting credit again. As it should be.

If the government really wanted to help them they would have made sure their landlords and banks weren’t screwed over by their policies.

 

[38Chevy454]

Well of course. Banks are not free housing providers nor are landlords. But our system has turned them into that. And those owners and tenants who refuse to pay may have been housed for free for a year but will have more difficulties in the future renting or getting credit again. As it should be.

If the government really wanted to help them they would have made sure their landlords and banks weren’t screwed over by their policies.

Agree completely. Gov't artificial interference in a market. But then when a large percentage of the population has their hand out and not contributing, it provides an opportunity for exploitation.

 

[snowboarder]

Agree completely. Gov't artificial interference in a market. But then when a large percentage of the population has their hand out and not contributing, it provides an opportunity for exploitation.

My point exactly. How sustainable is this? People not paying mortgages/rent and living for free?

 

[Retireby45ish]

My point exactly. How sustainable is this? People not paying mortgages/rent and living for free?

When does this deadline end? June?
I assume this will only affect those in lower level housing as if you can buy a 700k house you probably aren’t behind on mortgage.

Or if you are the lower refinance rates will make it easier to pay (lower payment).

So I don’t see how this will impact the market much other than at the lower tier homes….?

 

[tmitchell]

I’ve been looking for a home in a couple of these desirable work from home spots in MCOL areas as part of my plan to escape HCOL and enjoy a better environment. Watching the prices skyrocket—in many cases beyond my number—has just been depressing.

This morning I took my name off the lists of a couple realtors. Guess I’ll be renting for awhile. And worse now I feel less confident about my plan :/

 

[LRDave]

Mortgage lenders are going to quietly get the bad loans off their books (one way or another) and get back to business as usual.

For small private landlords, is this not exactly the kind of risk you take on when you get in this business?

 

[Keim]

Mortgage lenders are going to quietly get the bad loans off their books (one way or another) and get back to business as usual.

For small private landlords, is this not exactly the kind of risk you take on when you get in this business?

I suspect massive govt interference due to a worldwide pandemic is a black swan that wasnt factored into most small time landlords real estate risk assessments.

 

[Joylush]

Mortgage lenders are going to quietly get the bad loans off their books (one way or another) and get back to business as usual.

For small private landlords, is this not exactly the kind of risk you take on when you get in this business?

Re: small private landlords

Of course we consider risks. That why we screen well. Why we obtain insurance. Why we have funds available to cover vacancies and repairs. WHY WE KNOW IF WE HAVE A DEADBEAT or NON PAYOR THERE ARE LAWS AND A COURT SYSTEM IN PLACE to protect or rights and mitigate our risks.

Having our property taken, or rights stripped and being ordered to provide free public housing for upwards of a year with little to no recourse is not something that could ever be planned for or anticipated. That is not the kind of risk anyone would take.

How about the government demand you house a non family member at your expense and pay all the bills associated with housing them in your house without compensation or any recourse for a year? Because that is what has been done to many other homeowners. And so there will of course be consequences that will affect everyone in one way or another.

 

[snowboarder]

When does this deadline end? June?
I assume this will only affect those in lower level housing as if you can buy a 700k house you probably aren’t behind on mortgage.

Or if you are the lower refinance rates will make it easier to pay (lower payment).

So I don’t see how this will impact the market much other than at the lower tier homes….?

Well some homes that were $300K last year are up to $420K this year. Not sure if they are lower tier but middle class. Sure people can re-fi and lower their payments, but can you re-fi if you don't have a job or other collateral assets?


Unless they extend the forbearance (which they probably will) we may see more inventory in the coming months.

 

[snowboarder]

Maybe we'll see more like these in the near future:


Long Island man dodges eviction for 20 years, living in house he doesn’t own




https://nypost.com/2021/05/01/ny-man-dodges-eviction-for-20-years-living-in-foreclosed-house/

 

[Another Reader]

I'm in the same position as Joylush. I bought four in 2010-2012 for $64 to $74k. I would list them for around $290k and expect multiple offers. I bought for the long term and the tax hit in capital gains and AMT would be horrendous. My tenants are all paying on time and most are long termers. Going to sit this bubble out.

 

[Joylush]

I'm in the same position as Joylush. I bought four in 2010-2012 for $64 to $74k. I would list them for around $290k and expect multiple offers. I bought for the long term and the tax hit in capital gains and AMT would be horrendous. My tenants are all paying on time and most are long termers. Going to sit this bubble out.

Yes, the tax hit is horrendous. It seems the profit on the third ends up all being spent to pay the taxes on the sale of every three of them. I’m trying to limit my sales to no more than three a year. But when I started selling I had 34 of them. Even at just three sales a year it was going to take me ten or eleven years to get rid of them.

But I felt it was best to take advantage of the strong sellers market and just pay the taxes. If taxes go up more or the market crashes I can just stop selling them if it no longer makes sense to do so. I will probably still end up dying with a dozen or so houses. That will be a little easier for my heirs to deal with.

 

[NW-Bound]

My point exactly. How sustainable is this? People not paying mortgages/rent and living for free?

Renters protected by the eviction moratorium still have to pay back rents later.

How many will be able to do that?

Then, when they are finally evicted, they will not be able to rent again, like an earlier poster noted.

 

[snowboarder]

Renters protected by the eviction moratorium still have to pay back rents later.

How many will be able to do that?

Then, when they are finally evicted, they will not be able to rent again, like an earlier poster noted.

Right so when landlords who don't get paid and who can't pay the mortgage on their rental properties are forced to sell them what will happen?
Are we talking bubble when people refuse to pay mortgages and the banks can no longer bear the brunt? Even if Biden keeps extending the moratoriums something will eventually give and the deck of cards will collapse.

 

[OldShooter]

Right so when landlords who don't get paid and who can't pay the mortgage on their rental properties are forced to sell them what will happen?
Are we talking bubble when people refuse to pay mortgages and the banks can no longer bear the brunt? Even if Biden keeps extending the moratoriums something will eventually give and the deck of cards will collapse.

It will be a mess. An hour before the moratorium ends and and an hour after, the number of tenants and number of dwellings will be the same. A landlord who evicts is likely to have his potential replacement tenant pool nearly 100% people who have also been evicted. Now what?

Mortgages is another mess. Remember that banks are not the lenders, just the servicers. The actual lender/creditors are holders of the securitized loan packages, far removed from the front line payment issues and not well equipped to deal with delinquent mortgages on an individual basis.

 

[ExFlyBoy5]

Is it quite possible that the DC court ruling (yesterday) on the moratorium will result in it going away. An appeal was filed almost immediately, but I see it going away sooner than later.

DW (she is in the RE leasing world) just got off a telecon about the current goings on in several markets. One of the markets usually has about 6,000 properties for sale. As of this morning, it was less than 800. Any time a house hits the market (talking renters now) they have multiple applications and sounds like in some cases, there are now bidding wars on the rent price (as in applicants are offering MORE than this rent is listed). This is absolute craziness right now. I would NOT want to sell today if I didn't have someplace to go (as in already purchased).

 

[socca]

Redfin somehow got the idea that I want to live in Fremont, CA and occasionally sends me an e-mail with a new listing in that area - usually a dilapidated shack offered at $1.2M . This doesn't mean anything - I don't know anything about CA real estate (past or present), and probably never will.

 

[NW-Bound]

It will be a mess. An hour before the moratorium ends and and an hour after, the number of tenants and number of dwellings will be the same. A landlord who evicts is likely to have his potential replacement tenant pool nearly 100% people who have also been evicted. Now what?

Many landlords may decide to get out of the rental business, and to sell their properties.

I found out that one of the ex-neighbors was not the owner of the house he lived in, but a renter. He has been good on paying rent, but his landlord wanted the house back so he could take advantage of the hot market. The house sold after just a few days.