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Picture of Hammer1967
posted
We are living in OZ

I went to an auction today. A small two bedroom house in town and it need a TON of work, about 30k worth. And that’s what I could see.
Everything I could see needed work, about 1100 sq ft.

It sold for $180,000 plus 10% for the auction company.

How much longer can this continue?


__________________________

If Jesus would have had a gun he would be alive today. Homer Simpson
“Him plenty dead” Tonto
 
Posts: 1096 | Location: TN | Registered: February 23, 2008Reply With QuoteReport This Post
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posted Hide Post
quote:
Originally posted by Hammer1967:
We are living in OZ

I went to an auction today. A small two bedroom house in town and it need a TON of work, about 30k worth. And that’s what I could see.
Everything I could see needed work, about 1100 sq ft.

It sold for $180,000 plus 10% for the auction company.

How much longer can this continue?
A long time considering there is a housing shortage.
 
Posts: 4062 | Registered: January 25, 2013Reply With QuoteReport This Post
Fighting the good fight
Picture of RogueJSK
posted Hide Post
quote:
Originally posted by Hammer1967:
A small two bedroom house in town and it need a TON of work, about 30k worth. And that’s what I could see.


It's simple... All you gotta do is lay down some cheap laminate flooring after watching Youtube for a couple minutes to figure out how to install it, knock out a few walls to make it "open concept" (wait those weren't loadbearing were they?), plant some flowers for curb appeal, install some stainless appliances, and slap a coat of light gray paint over everything. Then flip it for $400k. Just like on TV. Easy-peasy.
 
Posts: 33464 | Location: Northwest Arkansas | Registered: January 06, 2008Reply With QuoteReport This Post
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Picture of mikeyspizza
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What I don't get is where are all the buyers/bidders coming from? How is there suddenly a housing shortage? Is it because of the low interest rates? Existing owners selling to take advantage of high selling prices, then rebuy at super low interest rates? Once interest rates rise, those with adjustable rate mortgages are gonna be hurting.
 
Posts: 4092 | Location: North Carolina | Registered: August 16, 2003Reply With QuoteReport This Post
Big Stack
posted Hide Post
You think you're being sarcastic, but...

quote:
Originally posted by RogueJSK:
quote:
Originally posted by Hammer1967:
A small two bedroom house in town and it need a TON of work, about 30k worth. And that’s what I could see.


It's simple... All you gotta do is lay down some cheap laminate flooring after watching Youtube for a couple minutes to figure out how to install it, knock out a few walls to make it "open concept" (wait those weren't loadbearing were they?), plant some flowers for curb appeal, install some stainless appliances, and slap a coat of light gray paint over everything. Then flip it for $400k. Just like on TV. Easy-peasy.
 
Posts: 21240 | Registered: November 05, 2003Reply With QuoteReport This Post
Fighting the good fight
Picture of RogueJSK
posted Hide Post
quote:
Originally posted by mikeyspizza:
Once interest rates rise, those with adjustable rate mortgages are gonna be hurting.


Nobody with more than 2 brain cells to rub together is doing an ARM right now. Taking out an ARM is basically gambling that interest rates are going to go down in the future. But we're at the lowest interest rates in US history. There's literally nowhere for them to go but up. So zero upside to going with an ARM.

In fact, lenders may not even be offering ARMs at the moment. ARMs' selling point is that they usually offer a lower interest rate than the current fixed rates (during the initial period). But fixed rates are so ridiculously low that I don't think lenders have enough room to undercut their own fixed rates with even better ARM rates.

quote:
Originally posted by BBMW:
You think you're being sarcastic, but...


Oh, no. I'm fully aware of how most flips are done... As cheaply as possible, and mostly cosmetic.

Under the shiny candy coating, turds lurk.
 
Posts: 33464 | Location: Northwest Arkansas | Registered: January 06, 2008Reply With QuoteReport This Post
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Picture of P250UA5
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Based on the listing prices, the 2 houses near me, both under contract, indicate that we've appreciated 40-60% since we moved here in 2017.

Both went under contract almost as soon as the sign hit the yard.

2 others recently sold, not sure the days on the market.




The Enemy's gate is down.
 
Posts: 16287 | Location: Spring, TX | Registered: July 11, 2011Reply With QuoteReport This Post
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Picture of ACTEG
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How much of this shortage is "real" demand, as in families buying houses? How much of it is Zillow, open door, and countless PE firms buying up property? Considering the median income in my area, I don't know how most people afford their houses. I'm glad I bought my house years ago when prices were dirt cheap.
 
Posts: 3593 | Registered: March 04, 2003Reply With QuoteReport This Post
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Zillow has stopped buying houses, at least temporarily.

https://www.usatoday.com/story...e-flippers/49278797/


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Dances with Crabgrass
 
Posts: 2183 | Location: East Virginia | Registered: October 12, 2009Reply With QuoteReport This Post
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Picture of ridewv
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quote:
Originally posted by Hammer1967:


It sold for $180,000 plus 10% for the auction company.

How much longer can this continue?


Until interest rises, bring back 8% mortgage and 12% auto loans and our "shortages" will disappear.


No car is as much fun to drive, as any motorcycle is to ride.
 
Posts: 7391 | Location: Northern WV | Registered: January 17, 2005Reply With QuoteReport This Post
Bolt Thrower
Picture of Voshterkoff
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180k won’t get you a single wide on a lot here, sounds cheap to me.
 
Posts: 10081 | Location: Woodinville, WA | Registered: March 30, 2004Reply With QuoteReport This Post
Raptorman
Picture of Mars_Attacks
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Where is the money coming from to buy these houses?

Houses START at $500,000 in my area and there's no shortage of buyers.

People couldn't have made THAT much money betting in the stock market on crypto without huge capital gains penalties.


____________________________

Eeewwww, don't touch it!
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Posts: 34582 | Location: North, GA | Registered: October 09, 2002Reply With QuoteReport This Post
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30%-plus increase in residential real estate prices here over the past 3 years, close to 50% over the past 5 years. People are still lining up to participate in bidding wars on new listings, and it is not unusual for homes to sell in just hours for 10% to 20% over asking price.

The driving factor seems to be low mortgage interest rates. A $250K mortgage at 2% APR will have first year interest costs of about $5K. Same $250K deal at 8% APR and first year interest would be about $20K.

Historically low interest rates mean greatly reduced cost to the borrowers, allowing buyers to qualify for much higher loans within the same monthly payment amounts. Competitive bidding results in rapidly increasing home values.

One of the down-sides is already taking place. Property tax assessments are based upon market value of the property, so taxes are rising just as rapidly as home values. This affects not only the home buyers but also renters, as landlords must increase rents to offset the increasing costs of owning rental properties. Also, retirees on fixed incomes are seeing their costs constantly increasing and taking larger portions of their budgets.

Homeowners insurance is also priced to reflect property values, typically the replacement cost to rebuild the home.

We have no mortgage. The property taxes on our home now are higher than our house payments on the first home we purchased 50 years ago. Homeowners insurance is nearly as expensive as our house payments were back in the day. Adding the two together, the ongoing costs of owning our home now are nearly double what we paid in monthly payments back then.

Still have to have a place to live, so we will stay right here for the foreseeable future. Maybe the tipping point won't arrive in my lifetime.


Retired holster maker.
Retired police chief.
Formerly Sergeant, US Army Airborne Infantry, Pathfinders
 
Posts: 1119 | Location: Colorado | Registered: March 07, 2009Reply With QuoteReport This Post
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We had 2 homes sell in my rural town this month. Both were purchased by out-of-staters (MA and CT).

Both of these homes are not being occupied by the buyers but instead rented.

This is what is happening.
 
Posts: 4979 | Location: NH | Registered: April 20, 2010Reply With QuoteReport This Post
Fighting the good fight
Picture of RogueJSK
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quote:
Originally posted by Mars_Attacks:
Where is the money coming from to buy these houses?

Houses START at $500,000 in my area and there's no shortage of buyers.

People couldn't have made THAT much money betting in the stock market on crypto without huge capital gains penalties.


Around here, a large number of new homebuyers are people moving in from other areas.

Cost of living, including housing costs, are lower here than in most of the rest of the country.

So you end up with a buyer who just sold their tiny 1 bedroom house on either coast for $1 million, then moves here and can easily afford to bid $300k on a $200k 3 bedroom house, and they still see it as a bargain (and are still pocketing $700k in profit).


For example, I know a former Sheriff's Deputy from California who retired about a decade ago, sold his little house in CA for over $1 million, moved to Arkansas, bought a really nice house here for $300k, plus a boat, sports car, and an RV, and still pocketed almost a half million in profit.

Or, I know another guy who moved from California about 4 years ago, and used the money from selling his CA house to buy himself a nice house to live in here plus a half dozen cheaper rental houses around the area.
 
Posts: 33464 | Location: Northwest Arkansas | Registered: January 06, 2008Reply With QuoteReport This Post
Big Stack
posted Hide Post
For the last several years, when anyone asks why anything has gone up in price, this is my standard answer:



quote:
Originally posted by Mars_Attacks:
Where is the money coming from to buy these houses?

Houses START at $500,000 in my area and there's no shortage of buyers.

People couldn't have made THAT much money betting in the stock market on crypto without huge capital gains penalties.
 
Posts: 21240 | Registered: November 05, 2003Reply With QuoteReport This Post
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Picture of neverfollow
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Live south of Charlotte. Bought our house in a typical planned community for $505,000 in 2019. House across the street, same house, no screened porch (we have one), just sold for $729,000, listed at $675,000. We could sell ours for north of $735,000, but where do we go next - it is ridiculous what is happening to housing prices.
 
Posts: 105 | Location: NC | Registered: March 21, 2020Reply With QuoteReport This Post
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Picture of Ozarkwoods
posted Hide Post
quote:
Originally posted by RogueJSK:
quote:
Originally posted by Hammer1967:
A small two bedroom house in town and it need a TON of work, about 30k worth. And that’s what I could see.


It's simple... All you gotta do is lay down some cheap laminate flooring after watching Youtube for a couple minutes to figure out how to install it, knock out a few walls to make it "open concept" (wait those weren't loadbearing were they?), plant some flowers for curb appeal, install some stainless appliances, and slap a coat of light gray paint over everything. Then flip it for $400k. Just like on TV. Easy-peasy.


Oh you forgot subway tile back splash in the kitchen Big Grin


ΜΟΛΩΝ ΛΑΒΕ
 
Posts: 4907 | Location: SWMO | Registered: October 20, 2009Reply With QuoteReport This Post
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I just sold my Bay Area house in June for a few dollars under 1mm and moved to the FL panhandle and have enough left over that I could pay my house off here. But the payment is 1/2 what I was paying and I brought my job & salary with me. I’m actively shopping for multi family homes but there are no good properties available. Maybe I’ll buy a SFR to rent for 20 years then when I’m much older and tired of the acreage maintenance I’ll downsize to a house a renter paid off for me.

I do mortgages for a bank that caters to the 1%. You’d be really shocked at what a regular pair of folks who are mid career at tech companies bring home in salary and stock RSU. And maybe 1 goes to a pre IPO company and bets on the come they will hit the big home run. Buying A 2-3mm house and a 1mm mortgage is pretty much commonplace. A lot do 30 fixed but even more do a 7-10 year interest only loan and invest the rest. The thought process is borrow at mid 2% and either sell or pay off in full in 7-10 years. I have this conversation at least weekly with clients. And the kids these days. Nobody keeps cash in checking or savings past maybe 1 month it’s all in stocks/crypto. It’s only going up you know…. Big unforeseen expense? They call me for a HELOC or charge it. Many tech companies vest their RSU grants monthly of quarterly after the first anniversary vesting. So if you have maybe several $k of stock coming due that you can sell monthly why do you worry ?
 
Posts: 5112 | Location: Florida Panhandle  | Registered: November 23, 2008Reply With QuoteReport This Post
I Am The Walrus
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Buying a house is ridiculous now and that has trickled down to renting. Rentals are ridiculously expensive too.


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Posts: 13359 | Registered: March 12, 2005Reply With QuoteReport This Post
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