The real estate market is crazy right now

[RickFLM4]

Originally Posted by Bc2005

We are in the process of selling our house in Texas, and the biggest issue for many buyers is the lack of comps, and therefore no decent appraisal.

Very few houses are on the market this spring, and comps from a few months ago aren’t “comparable” to today’s prices. And it can take up to three weeks to get an appraisal that may not be high enough to get lender approval of a loan. We have rejected offers that are contingent on appraisal because we have to sit on an offer while we wait for the appraisal.

I had neighbors who listed with cash only as a requirement. Didn't even let people look at the house unless it was a cash deal because they knew it wouldn't appraise. By BIL did the same. So even well qualified buyers have access to only a portion of the limited inventory on the market.

I know lenders need them, but when I look at what appraisers actually do, it's a joke to me. It's just a mathematical exercise that misses the mark in a rising or falling market because they are comparing to homes that sold previously, which they haven't inspected for comparison purposes.

[ryan stewart]

Originally Posted by RickFLM4

I had neighbors who listed with cash only as a requirement. Didn't even let people look at the house unless it was a cash deal because they knew it wouldn't appraise. By BIL did the same. So even well qualified buyers have access to only a portion of the limited inventory on the market.

I know lenders need them, but when I look at what appraisers actually do, it's a joke to me. It's just a mathematical exercise that misses the mark in a rising or falling market because they are comparing to homes that sold previously, which they haven't inspected for comparison purposes.

Yeah it seems like such a con. I know the appraiser for my house never stepped foot in it. Dude just googled comps and basically said, "yeah, this one should go for that."

Few hundred bucks for a google search of the hood.

[ryan stewart]

Originally Posted by dreamingat30fps

This makes sense, but my question is why are they not giving away houses in CA, WA, NY or NJ? If a max exodus is driving prices up in other areas shouldn’t it also be driving prices down in those areas? Or are they ALL buying second homes and keeping their properties there?

The house in NC we had to pay cash for and it had like 12 offers after 1 day of showing (she was going to show it 2 days but changed her mind after day 1). That was like June of last year. Around Dec I decided to get a cash out mortgage because of the crazy low rates. Had to get it appraised for that… I was worried… I was pretty sure it would come back lower than what we paid. Ended up coming back $50k higher! I’m always browsing the listing for the hell of it and even much crappier houses on less land are listing for $75k+ more than we paid less than a year ago!

Because this mass exodus is a myth. 165k out of nearly 40 million and ignoring the normal flow of people INTO the market that replace those 165k that moved out.

And in NYC notice where they are always shooting showing defunct businesses and whatnot? Its ALWAYS midtown Manhattan. Nobody goes to the village, downtown, soho, or any of the residential boroughs. Midtown is a ghost town because nobody is going into the office, which killed those businesses because people weren't picking up lunch, shopping as they left work or getting dry cleaning done. But if you go into any residential area its business as usual.

COVID only put a slight pause on the continued mass urbanization of our population. We are a service economy and to maximize your market you have to be where your customers are, and customers want to be where the services are. So the bulk of our working population has no choice to move to the cities.

[vreihen16]

In these parts (1-2 hours north of NYC), home prices have tripled since the start of COVIDgeddon because city folk are buying houses to escape the urban areas. Most of those people live in apartments, so there's no house to be sold when they move...and the waiting list for "affordable" NYC apartments is always insane.

The funny thing is when they find out that there's no municipal water, sewer, natural gas, or public transit out here in the sticks, and some towns only have pathetically-slow DSL for Internet access.....

[Chick Webb]

Originally Posted by kscarrol

A 30 year mortgage is still just 4%. In an inflationary environment you want to borrow money at a low rate and invest in physical asset appreciating at a a higher rate.

As for negative equity, many are cash buyers so they might have a loss but no negative equity.

I guess I wasn't clear, but basically what I was trying to say is that when interest rates (today 5% for a 30yr fixed, by June probably 6+%, by the end of the year maybe 8%) rise more people that are buying to occupy will find they can't qualify. That depresses demand and ultimately prices, as people that must sell (job change, etc.) will be forced to drop their asks when properties don't move.

Investors, including flippers and rent seekers, will also begin pull back from the market because their real rates of return (which includes the potential for the prices of the assets they've purchased to fall) will not justify the risk. This additional drop in demand should further depress prices.

My personal belief is that interest rates are going to rise very fast, and that the housing market will turn around seemingly overnight. I don't know when that will be, but it's not 5 years from now. Near-term buyers should be very careful, IMHO.

[kscarrol]

Originally Posted by Chick Webb

I guess I wasn't clear, but basically what I was trying to say is that when interest rates (today 5% for a 30yr fixed, by June probably 6+%, by the end of the year maybe 8%) rise more people that are buying to occupy will find they can't qualify. That depresses demand and ultimately prices, as people that must sell (job change, etc.) will be forced to drop their asks when properties don't move.

You were clear and I agreed with you but simply said I don't what that pain/tipping point is. Yes, 5% money seems expensive compared to 3% but it's still low. Getting to 6%, 7% or 8% and yes certainly that really slows down folks who are financing. 95% of offers for residential real estate here in NOLA and in SC where we bought last summer are cash, not dependent on rates. That will dry up at some point as well but I don't pretend to be smart enough to time the market.

Edit: You selected parts of my post but missed this sentence. Perhaps not as eloquently said as your comment but the same end result none the less...

"With the threat of higher rates, folks are likely scrambling to lock in and buy now before rates go higher. Will the bubble burst, yes, but what is that pain point when inventory is so low?"

[RickFLM4]

Originally Posted by Chick Webb

I guess I wasn't clear, but basically what I was trying to say is that when interest rates (today 5% for a 30yr fixed, by June probably 6+%, by the end of the year maybe 8%) rise more people that are buying to occupy will find they can't qualify. That depresses demand and ultimately prices, as people that must sell (job change, etc.) will be forced to drop their asks when properties don't move.

Investors, including flippers and rent seekers, will also begin pull back from the market because their real rates of return (which includes the potential for the prices of the assets they've purchased to fall) will not justify the risk. This additional drop in demand should further depress prices.

My personal belief is that interest rates are going to rise very fast, and that the housing market will turn around seemingly overnight. I don't know when that will be, but it's not 5 years from now. Near-term buyers should be very careful, IMHO.

Sure, the intent of rate increases is to cool demand and inflation, including housing. I agree some additional buyers will be forced to the sidelines. But the fundamental issue of low supply won’t be solved by rate increases. Demand will be leveled off to come more in line with supply. Flippers should always be careful but long term buyers should focus more on the long-term rather than trying to time the market. People trying to time the market for the last few years have been waiting while prices just continued to increase when they thought further increases were impossible.

Prices will inevitably level off as rates rise and could definitely stagnate at some point, but anyone waiting for a crisis-level drop similar to the financial crisis will likely stay on the sidelines indefinitely.

[e90335e36m3]

https://www.google.com/amp/s/www.mar...08-11648044987

New home sales slowing. Hope they collapse. Existing homeowners will be insulated since long term the value will rebound. Then maybe I can buy my home in San Diego.

[chassis]

New home sales aren’t slowing. They are on a 10 year tear.

[Chick Webb]

Originally Posted by chassis

New home sales aren’t slowing. They are on a 10 year tear.

They are, actually - February Existing Home Sales: Mounting Headwinds. KB Homes announced today and missed on revenue and earnings because of the reasons (they say) stated in that Zillow piece.

Right now, though, the slowdown is mostly lack of inventory and the lowest affordability in recent history. However, when interest rates shoot up, and companies start paring their workforces, we'll see a lot more inventory because people with adjustable mortgages that find themselves unable to keep up the payments and those who've outright lost their jobs will sell before their equity disappears. At that same time, with the economy on the decline and interest rates elevated, fewer people will want to/could be buying and we'll see prices begin to decline. Hopefully not too precipitously. But it will happen. Housing cannot remain this unaffordable forever. Google "reversion to the mean". It's a thing.

[Alfisti]

Just starting to see some cooling here. Now that's hard to quantify as many of the listed properties were asking very aggressive numbers in light of the boom so they were never even listed at the curret market price, but still, they are not moving so there's some calm.

I am seeing the same on the 997 market, prices are extremely high BUT some have been sitting there 3 to 4 months now.

[freakystyly]

Over in my town, prices are up another 33% year over year. Sales are up 40% from last year.
Average days to sell is 8.

Everything is fiiiiiiine.....

[srybicki]

Definitely has changed in the matter of months

[Hawkeye]

Just glad I got my place re-appraised and got rid of that pesky PMI. Now I have the best of both worlds, high loan to original value, super low interest rate, AND no PMI.

Does not seem like sales have slowed much around me, still see things flying off the market even with the current rates.

[RickFLM4]

Rapid price increases seem to have calmed down here. See some price cuts but on houses that had insanely high prices to start. Doesn’t seem like any across the board major declines. Inventory still seems pretty low based in Zillow / Realtor.com listings. A lot of sales here are to New Yorkers paying cash so less direct impact by rate hikes.

[zx10guy]

Doesn't seem to be slowing in my neighborhood. Latest house listed in my neighborhood went $130k over the last high bar sold house in the neighborhood. This listing was only a couple of months after the last one had gone to settlement. This latest listing was only on the market for about a week before being put under contract. This house has been under contract for about a month now. So we'll see if it finally gets sold or not.

I've been getting annoying text messages from realtors both for my primary house and my vacation home. Some how these realtors were able to dig up my cell phone number.

[spazzyfry123]

.

[Joe T]

was in an open house today (a comp for ours that's going on the market in 7-10 days)

this is what you see when you walk into the front door. Built in '83 and is like a time capsule from that date. (needs SERIOUS updating)

I want 2 knights in shining armor greeting me when I get home too

listing price is 1.1mm and as mentioned needs a LOT of work (ours will be will under $1mm and has been updated int he last 10 years

[aj_g80]

i was hoping housing would completely blow up. But looks like that wont happen..will have to just take the soft blow unfortunately..

[RickFLM4]

Originally Posted by Joe T

was in an open house today (a comp for ours that's going on the market in 7-10 days)

this is what you see when you walk into the front door. Built in '83 and is like a time capsule from that date. (needs SERIOUS updating)

I want 2 knights in shining armor greeting me when I get home too

listing price is 1.1mm and as mentioned needs a LOT of work (ours will be will under $1mm and has been updated int he last 10 years

Raise your ask price.

[BMWILUVU]

There are few places to hide while this quackery is happening. If you sell your house and buy another, the new house has also risen in ask and the rents are ridiculous. It only makes sense when downsizing and relocating to a cheaper area and Texas and Florida are not cheap any longer.

[Tommy-G]

Originally Posted by BMWILUVU

There are few places to hide while this quackery is happening. If you sell your house and buy another, the new house has also risen in ask and the rents are ridiculous. It only makes sense when downsizing and relocating to a cheaper area and Texas and Florida are not cheap any longer.

Florida is insane right now. No inventory and ridiculous prices