Crazy Hot Housing Market

[zolotiyeruki]

I've heard Tahoe as well.

[FINate]

And Idaho...

https://www.krem.com/article/money/economy/boomtown-inland-northwest/coeur-dalene-hottest-emerging-housing-market-wall-street-journal/293-2993a3d6-b5c6-4a7f-8e4c-7e20ba206582

[zolotiyeruki]

And Idaho...

https://www.krem.com/article/money/economy/boomtown-inland-northwest/coeur-dalene-hottest-emerging-housing-market-wall-street-journal/293-2993a3d6-b5c6-4a7f-8e4c-7e20ba206582

A coworker of mine, who lives in Coeur d'Alene, handed in his two-week notice last week.  He's an engineer, and wants to dive into being a real estate agent.

[jeromedawg]

Highest over asking bid I've seen to date (it just closed today) is $177k over on a home listed at $1.03mm. it sold for over $1.2mm. this is a 4/3 2000sq ft sfh with a small yard and $200 HOA

Not as crazy as the bay area but starting to get that way pretty quickly

[theoverlook]

A house I toured back in 2015 that struggled to sell for $600k (it was on the market for a while, over 30 days I believe) just went up for sale for $1.1M and was in contract in 3 days. I do wonder what it sold for.

I was struggling with maybe putting an offer in on a commercial building that was asking $225k. It sold for $365k! That's 60% over asking.

[Psychstache]

Highest over asking bid I've seen to date (it just closed today) is $177k over on a home listed at $1.03mm. it sold for over $1.2mm. this is a 4/3 2000sq ft sfh with a small yard and $200 HOA

Not as crazy as the bay area but starting to get that way pretty quickly

We had one listed in our area-ish for $1mm. Sold for $1.3mm (AKA $300K over asking)!

[jeromedawg]

Highest over asking bid I've seen to date (it just closed today) is $177k over on a home listed at $1.03mm. it sold for over $1.2mm. this is a 4/3 2000sq ft sfh with a small yard and $200 HOA

Not as crazy as the bay area but starting to get that way pretty quickly

We had one listed in our area-ish for $1mm. Sold for $1.3mm (AKA $300K over asking)!

That's crazy - where are you located?

[thedigitalone]

House nearby, in a hot real estate market and on a lake had a Zestimate of $1.4m, listed for $1.8m and sold in 1 day for $2.1m with an all cash offer no contingencies or inspection. King County, WA. insane.

[MaybeBabyMustache]

House nearby, in a hot real estate market and on a lake had a Zestimate of $1.4m, listed for $1.8m and sold in 1 day for $2.1m with an all cash offer no contingencies or inspection. King County, WA. insane.

That's bay area crazy

[Captain Cactus]

Is this madness ever going to end? 

[former player]

Not as long as the acccumulation and inheritance of capital remains as lowly taxed as it is.

[Hotstreak]

I've heard that assisted living, nursing homes, etc., have a bad reputation right now because of COVID, and that elderly homeowners are staying in their SFR's in order to avoid moving to congregate living.  This is a temporary plug on supply.

[Psychstache]

Highest over asking bid I've seen to date (it just closed today) is $177k over on a home listed at $1.03mm. it sold for over $1.2mm. this is a 4/3 2000sq ft sfh with a small yard and $200 HOA

Not as crazy as the bay area but starting to get that way pretty quickly

We had one listed in our area-ish for $1mm. Sold for $1.3mm (AKA $300K over asking)!

That's crazy - where are you located?

DFW

[joenorm]

I am lucky enough to not be property hunting during this time. But what do you tell people(friends) who want to put roots down in a town they have lived in for years and are just now ready to buy?

Nobody can say with confidence this will pass. Maybe prices stay elevated, then what? For some, owning isn't just for ownership sake, its the ability to build a shop to be more creative or a home to raise a family.

So the idea of staying on the sidelines is just as scary as jumping into a crazy market because what if it never comes back and now was the time all along?

I really feel for young families who just want a place to call their own and put energy into, but simply cannot and I wonder if they ever will be able to at this rate.

[jeromedawg]

I am lucky enough to not be property hunting during this time. But what do you tell people(friends) who want to put roots down in a town they have lived in for years and are just now ready to buy?

Nobody can say with confidence this will pass. Maybe prices stay elevated, then what? For some, owning isn't just for ownership sake, its the ability to build a shop to be more creative or a home to raise a family.

So the idea of staying on the sidelines is just as scary as jumping into a crazy market because what if it never comes back and now was the time all along?

I really feel for young families who just want a place to call their own and put energy into, but simply cannot and I wonder if they ever will be able to at this rate.

I feel the same way :( We are in the process of putting an offer in on a place that we think we have a decent chance at. We've already put offers on a handful of other places and have gotten beat out every time. It's really dejecting and frustrating. Part of me says "why subject ourselves to this? Just wait it out" but there's this background FOMO and a lot of "what ifs?" that also creeps in... is it *really* going to get better anytime soon? Anytime soon might mean 2-3 years...maybe longer. All the while, we still have our lives to live and our kids are growing older. I know we're not supposed to compare ourselves to others but a majority of our friends (and in many cases where the husbands are younger than me) already have homes that they're settled into and their kids are happily able to play in their own yard and they all pretty much do what they want. And they've had this for years. So yea, FOMO is a real thing... on top of that, we were planning to move to this area for the past few years *before* COVID hit and the bum-rush of people buying in the suburbs (when they would never have considered this in many other situations) and driving the prices up sucks and feels unfair.
Anyway, we're in a position where we *can* buy - it will be expensive but we can do it. The thought of paying much more for a home than we should, on top of having to claw at it and compete for it with others, is pretty sucky but I guess that's what it takes :T

[meghan88]

The Montreal housing market is nuts.  We love our neighbourhood but anything listed under the $2M mark is snapped up in a week or less.  Taxes are about 11K/year, rent is 32K/year.  Being close to retirement, we can't get our heads around buying something.  Cash out investments, pay cash and have a lot less investments to live on?  Or take a sky-high mortgage and spend (literally) the rest of our lives to pay it off?  Or something in between?

The only thing to do is ... hope for more language strife and another anglo exodus.  I am less than half-joking.

A sour-grapes take re. not buying:  Contractors won't rip us off; no maintenance to do.  We don't risk buying next to bad neighbours.  We can spend all our $ before we die and enjoy ourselves more.  $1.5M earning 5%/year more than covers the cost of rent.  Yet still, there's something to be said about buying ...

[SunnyDays]

I agree prices sound totally crazy in many markets, but I can see how people can “afford” it even on normal salaries.  Two people who plan to work for the rest of their lives and don’t really save anything have the vast majority of their net worth tied up in their homes.  If they continue to pay the mortgage until their old age, then down size to something cheaper/smaller, then they will still be alright in the end.  Assuming they will continue to work until they can’t, which is what most people here are trying to avoid.

[MrMoneySaver]

I agree prices sound totally crazy in many markets, but I can see how people can “afford” it even on normal salaries.  Two people who plan to work for the rest of their lives and don’t really save anything have the vast majority of their net worth tied up in their homes.  If they continue to pay the mortgage until their old age, then down size to something cheaper/smaller, then they will still be alright in the end.  Assuming they will continue to work until they can’t, which is what most people here are trying to avoid.

Kind of like being a sharecropper.

[Paper Chaser]

Available housing inventory has stopped falling. New home starts are rising. Not expecting significant price drops, but the rate of price increase may be slowing:

https://www.theatlantic.com/ideas/archive/2021/05/us-housing-market-records/619029/

[chemistk]

I am lucky enough to not be property hunting during this time. But what do you tell people(friends) who want to put roots down in a town they have lived in for years and are just now ready to buy?

Nobody can say with confidence this will pass. Maybe prices stay elevated, then what? For some, owning isn't just for ownership sake, its the ability to build a shop to be more creative or a home to raise a family.

So the idea of staying on the sidelines is just as scary as jumping into a crazy market because what if it never comes back and now was the time all along?

I really feel for young families who just want a place to call their own and put energy into, but simply cannot and I wonder if they ever will be able to at this rate.

I feel the same way :( We are in the process of putting an offer in on a place that we think we have a decent chance at. We've already put offers on a handful of other places and have gotten beat out every time. It's really dejecting and frustrating. Part of me says "why subject ourselves to this? Just wait it out" but there's this background FOMO and a lot of "what ifs?" that also creeps in... is it *really* going to get better anytime soon? Anytime soon might mean 2-3 years...maybe longer. All the while, we still have our lives to live and our kids are growing older. I know we're not supposed to compare ourselves to others but a majority of our friends (and in many cases where the husbands are younger than me) already have homes that they're settled into and their kids are happily able to play in their own yard and they all pretty much do what they want. And they've had this for years. So yea, FOMO is a real thing... on top of that, we were planning to move to this area for the past few years *before* COVID hit and the bum-rush of people buying in the suburbs (when they would never have considered this in many other situations) and driving the prices up sucks and feels unfair.
Anyway, we're in a position where we *can* buy - it will be expensive but we can do it. The thought of paying much more for a home than we should, on top of having to claw at it and compete for it with others, is pretty sucky but I guess that's what it takes :T

This echoes my sentiment completely.

At this point, you'd have to give me some seriously well put together arguments if you're trying to convince me that this market is going to drop within the next few years. At best, it's going to be flat from this point forward.

[ncornilsen]

Not as long as the acccumulation and inheritance of capital remains as lowly taxed as it is.

Citation, please.

[former player]

Not as long as the acccumulation and inheritance of capital remains as lowly taxed as it is.

Citation, please.

Try Piketty, Capital in the Twenty-First Century.

https://journals.sagepub.com/doi/full/10.1177/0308518X19873673

[jeromedawg]

I am lucky enough to not be property hunting during this time. But what do you tell people(friends) who want to put roots down in a town they have lived in for years and are just now ready to buy?

Nobody can say with confidence this will pass. Maybe prices stay elevated, then what? For some, owning isn't just for ownership sake, its the ability to build a shop to be more creative or a home to raise a family.

So the idea of staying on the sidelines is just as scary as jumping into a crazy market because what if it never comes back and now was the time all along?

I really feel for young families who just want a place to call their own and put energy into, but simply cannot and I wonder if they ever will be able to at this rate.

I feel the same way :( We are in the process of putting an offer in on a place that we think we have a decent chance at. We've already put offers on a handful of other places and have gotten beat out every time. It's really dejecting and frustrating. Part of me says "why subject ourselves to this? Just wait it out" but there's this background FOMO and a lot of "what ifs?" that also creeps in... is it *really* going to get better anytime soon? Anytime soon might mean 2-3 years...maybe longer. All the while, we still have our lives to live and our kids are growing older. I know we're not supposed to compare ourselves to others but a majority of our friends (and in many cases where the husbands are younger than me) already have homes that they're settled into and their kids are happily able to play in their own yard and they all pretty much do what they want. And they've had this for years. So yea, FOMO is a real thing... on top of that, we were planning to move to this area for the past few years *before* COVID hit and the bum-rush of people buying in the suburbs (when they would never have considered this in many other situations) and driving the prices up sucks and feels unfair.
Anyway, we're in a position where we *can* buy - it will be expensive but we can do it. The thought of paying much more for a home than we should, on top of having to claw at it and compete for it with others, is pretty sucky but I guess that's what it takes :T

This echoes my sentiment completely.

At this point, you'd have to give me some seriously well put together arguments if you're trying to convince me that this market is going to drop within the next few years. At best, it's going to be flat from this point forward.

Something else I've thought about is how many of us are often driven by value when making purchases, and buying a home is often not an exception in most instances. The problem, I feel, is that the current market has produced this narrative that "buying a home is invaluable" so the dilemma for a lot of people becomes "how do I placed value on something that's invaluable?"

[chemistk]

I am lucky enough to not be property hunting during this time. But what do you tell people(friends) who want to put roots down in a town they have lived in for years and are just now ready to buy?

Nobody can say with confidence this will pass. Maybe prices stay elevated, then what? For some, owning isn't just for ownership sake, its the ability to build a shop to be more creative or a home to raise a family.

So the idea of staying on the sidelines is just as scary as jumping into a crazy market because what if it never comes back and now was the time all along?

I really feel for young families who just want a place to call their own and put energy into, but simply cannot and I wonder if they ever will be able to at this rate.

I feel the same way :( We are in the process of putting an offer in on a place that we think we have a decent chance at. We've already put offers on a handful of other places and have gotten beat out every time. It's really dejecting and frustrating. Part of me says "why subject ourselves to this? Just wait it out" but there's this background FOMO and a lot of "what ifs?" that also creeps in... is it *really* going to get better anytime soon? Anytime soon might mean 2-3 years...maybe longer. All the while, we still have our lives to live and our kids are growing older. I know we're not supposed to compare ourselves to others but a majority of our friends (and in many cases where the husbands are younger than me) already have homes that they're settled into and their kids are happily able to play in their own yard and they all pretty much do what they want. And they've had this for years. So yea, FOMO is a real thing... on top of that, we were planning to move to this area for the past few years *before* COVID hit and the bum-rush of people buying in the suburbs (when they would never have considered this in many other situations) and driving the prices up sucks and feels unfair.
Anyway, we're in a position where we *can* buy - it will be expensive but we can do it. The thought of paying much more for a home than we should, on top of having to claw at it and compete for it with others, is pretty sucky but I guess that's what it takes :T

This echoes my sentiment completely.

At this point, you'd have to give me some seriously well put together arguments if you're trying to convince me that this market is going to drop within the next few years. At best, it's going to be flat from this point forward.

Something else I've thought about is how many of us are often driven by value when making purchases, and buying a home is often not an exception in most instances. The problem, I feel, is that the current market has produced this narrative that "buying a home is invaluable" so the dilemma for a lot of people becomes "how do I placed value on something that's invaluable?"

The FOMO factor isn't helping one bit, either. Like TP last March, the constant coverage just plants that seed in more and more people who might otherwise be comfortable where they are.

Not that reducing media coverage would have a discernable effect in the short term, but it's a pretty compelling tool to make people antsy to move.

I am aware that a lot of people have a genuine lack of space or a need to relocate but low rates, helicopter money, flexibility and FOMO are just creating a bonfire of housing interest.

[joenorm]

A 550 sqft one room, off-grid cabin just went into contract after 5 days on the market for $525,000 in the place I live.

It does not have an indoor toilet and has a dorm room style mini-fridge and would likely not be able to be financed conventionally. It's a pretty cool cabin, but my god this is bonkers.

[jeromedawg]

A 550 sqft one room, off-grid cabin just went into contract after 5 days on the market for $525,000 in the place I live.

It does not have an indoor toilet and has a dorm room style mini-fridge and would likely not be able to be financed conventionally. It's a pretty cool cabin, but my god this is bonkers.

lol that's nuts. what is the general location? West Coast? Midwest? East coast?

[joenorm]

A 550 sqft one room, off-grid cabin just went into contract after 5 days on the market for $525,000 in the place I live.

It does not have an indoor toilet and has a dorm room style mini-fridge and would likely not be able to be financed conventionally. It's a pretty cool cabin, but my god this is bonkers.

lol that's nuts. what is the general location? West Coast? Midwest? East coast?

PNW

[chicagomeg]

A 550 sqft one room, off-grid cabin just went into contract after 5 days on the market for $525,000 in the place I live.

It does not have an indoor toilet and has a dorm room style mini-fridge and would likely not be able to be financed conventionally. It's a pretty cool cabin, but my god this is bonkers.

lol that's nuts. what is the general location? West Coast? Midwest? East coast?

PNW

Is there any land with it?

[joenorm]

A 550 sqft one room, off-grid cabin just went into contract after 5 days on the market for $525,000 in the place I live.

It does not have an indoor toilet and has a dorm room style mini-fridge and would likely not be able to be financed conventionally. It's a pretty cool cabin, but my god this is bonkers.

lol that's nuts. what is the general location? West Coast? Midwest? East coast?

PNW

Is there any land with it?

Yes, It's on 5 wooded acres. Which sounds great but that is pretty standard around here. This is a rural vacation area so people come for some seclusion and privacy. And when I say woods i mean woods, there is not even a sunny clearing. Last I was aware there was not a permitted water source either.

It's just nuts. Over half a million dollars for someone's unpermitted art project in the woods.

[catccc]

It seems like the only people actually able to buy houses in our area are offering all cash.  Most houses are going to all cash offers with all contingencies waived.  It's pretty nuts.  But if they are paying all cash, why do the mortgage interest rates matter?  Or are they just turning around and getting a mortgage after closing?

We have been lifelong renters but want to buy before RE, which is around the corner.  (So we have jobs/income to get a mortgage, IDK, but I think I'm in stay invested and don't pay off the mortgage camp.)  We've been open to buying for the last dozen years and just haven't pulled the trigger.  We don't need to buy now and we aren't trying to time the market, we just want something suitable for our family.  I almost feel like the price is secondary, because another $100K on a house price when you have the leverage of a mortgage and a $2M nest egg probably shouldn't really matter, right?

Would it be crazy to get a mortgage on my parents' paid off home and invest the cash so that when we want to buy, we will have locked in a low rate, but rates will have gone up so prices will be less out of whack?  IDK, just thinking out loud.  I know there is then the question of what to do with that cash and risk until we find a home we want to buy...

[JetBlast]

It seems like the only people actually able to buy houses in our area are offering all cash.  Most houses are going to all cash offers with all contingencies waived.  It's pretty nuts.  But if they are paying all cash, why do the mortgage interest rates matter?  Or are they just turning around and getting a mortgage after closing?

Some probably do plan to finance after they’ve taken ownership as a way to not have their cash locked up. At these rates it’s not an unattractive idea.

Even if a lot of successful buyers are all cash, they’re still competing against people that need to finance and those buyers may bid up hoping to beat out cash offers. This of course means cash offers have to rise to at least be close to those planning to finance.

[secondcor521]

I know there are a lot of people in America with a lot of money, but I don't think there are *that* many.

I think what's happening is that people making "cash" offers are essentially just waiving the financing contingency.  They're taking on the risk that they can't get a mortgage in order to win the bidding wars.

Desperate times and all that.


More and more I think this market is nuts and am going to advise my son to bide his time.

[JetBlast]

I know there are a lot of people in America with a lot of money, but I don't think there are *that* many.

I think what's happening is that people making "cash" offers are essentially just waiving the financing contingency.  They're taking on the risk that they can't get a mortgage in order to win the bidding wars.

Desperate times and all that.


More and more I think this market is nuts and am going to advise my son to bide his time.

It wouldn’t surprise me. There is certainly an incentive for dishonesty in such a competitive market. Another factor that may be increasing ability to make all cash offers in low and medium cost markets is the doubling of the cap for 401k loans last year.

[secondcor521]

I know there are a lot of people in America with a lot of money, but I don't think there are *that* many.

I think what's happening is that people making "cash" offers are essentially just waiving the financing contingency.  They're taking on the risk that they can't get a mortgage in order to win the bidding wars.

Desperate times and all that.


More and more I think this market is nuts and am going to advise my son to bide his time.

It wouldn’t surprise me. There is certainly an incentive for dishonesty in such a competitive market. Another factor that may be increasing ability to make all cash offers in low and medium cost markets is the doubling of the cap for 401k loans last year.

Well it's not really dishonesty in my view.  They're just risking their earnest money deposit if they can't fulfill the contract.  Of course, earnest money deposits are apparently huge these days, so I still don't understand it fully.

Back in The Old Days (tm), we put down earnest money when we wrote the contract.  I learned recently from a new home buyer that nowadays they write the earnest money into the contract but the funds are only supplied if they win the bid.  And I think I read here that now the approach is to offer a bunch, have them accept your offer out of the pile, then whittle it down with repairs ("Yeah, we'll pay you $400K for this, but our inspector says you need to replace the HVAC and roof.") after all the other bidders have wandered off to the next house up for auction sale.

Kids these days.

[FINate]

I know there are a lot of people in America with a lot of money, but I don't think there are *that* many.

I think what's happening is that people making "cash" offers are essentially just waiving the financing contingency.  They're taking on the risk that they can't get a mortgage in order to win the bidding wars.

Desperate times and all that.


More and more I think this market is nuts and am going to advise my son to bide his time.

It wouldn’t surprise me. There is certainly an incentive for dishonesty in such a competitive market. Another factor that may be increasing ability to make all cash offers in low and medium cost markets is the doubling of the cap for 401k loans last year.

Well it's not really dishonesty in my view.  They're just risking their earnest money deposit if they can't fulfill the contract.  Of course, earnest money deposits are apparently huge these days, so I still don't understand it fully.

Back in The Old Days (tm), we put down earnest money when we wrote the contract.  I learned recently from a new home buyer that nowadays they write the earnest money into the contract but the funds are only supplied if they win the bid.  And I think I read here that now the approach is to offer a bunch, have them accept your offer out of the pile, then whittle it down with repairs ("Yeah, we'll pay you $400K for this, but our inspector says you need to replace the HVAC and roof.") after all the other bidders have wandered off to the next house up for auction sale.

Kids these days.

Sellers can, and should, require evidence of funds from prospective buyers before accepting an offer. Things such bank account and or brokerage statements. And if my memory serves correctly, these are sent along with a signed statement or some such thing. I suppose there's nothing preventing a buyer from forging these statements and lying, but this would cause a host of legal issues for them.

ETA: RE whittling down the price over repairs: If the sellers didn't adequately disclose major issues then that's a problem of their own creation.

[secondcor521]

I know there are a lot of people in America with a lot of money, but I don't think there are *that* many.

I think what's happening is that people making "cash" offers are essentially just waiving the financing contingency.  They're taking on the risk that they can't get a mortgage in order to win the bidding wars.

Desperate times and all that.


More and more I think this market is nuts and am going to advise my son to bide his time.

It wouldn’t surprise me. There is certainly an incentive for dishonesty in such a competitive market. Another factor that may be increasing ability to make all cash offers in low and medium cost markets is the doubling of the cap for 401k loans last year.

Well it's not really dishonesty in my view.  They're just risking their earnest money deposit if they can't fulfill the contract.  Of course, earnest money deposits are apparently huge these days, so I still don't understand it fully.

Back in The Old Days (tm), we put down earnest money when we wrote the contract.  I learned recently from a new home buyer that nowadays they write the earnest money into the contract but the funds are only supplied if they win the bid.  And I think I read here that now the approach is to offer a bunch, have them accept your offer out of the pile, then whittle it down with repairs ("Yeah, we'll pay you $400K for this, but our inspector says you need to replace the HVAC and roof.") after all the other bidders have wandered off to the next house up for auction sale.

Kids these days.

Sellers can, and should, require evidence of funds from prospective buyers before accepting an offer. Things such bank account and or brokerage statements. And if my memory serves correctly, these are sent along with a signed statement or some such thing. I suppose there's nothing preventing a buyer from forging these statements and lying, but this would cause a host of legal issues for them.

ETA: RE whittling down the price over repairs: If the sellers didn't adequately disclose major issues then that's a problem of their own creation.

I'm learning it all depends on where (and when) you live.  Real estate transaction practices vary all over the map.

[FINate]

I'm learning it all depends on where (and when) you live.  Real estate transaction practices vary all over the map.

Very true.

[Sibley]

I know there are a lot of people in America with a lot of money, but I don't think there are *that* many.

I think what's happening is that people making "cash" offers are essentially just waiving the financing contingency.  They're taking on the risk that they can't get a mortgage in order to win the bidding wars.

Desperate times and all that.


More and more I think this market is nuts and am going to advise my son to bide his time.

My parents are buying a house, in cash. They had to provide proof of funds along with the offer. They also got proof of funds with the cash offer when they sold their house. Based on that, in MI and IN, cash offer = have cash.

For people trying to buy - parents have an accepted offer on a house. Full asking price, not over. It can happen.

[JetBlast]

I know there are a lot of people in America with a lot of money, but I don't think there are *that* many.

I think what's happening is that people making "cash" offers are essentially just waiving the financing contingency.  They're taking on the risk that they can't get a mortgage in order to win the bidding wars.

Desperate times and all that.


More and more I think this market is nuts and am going to advise my son to bide his time.

It wouldn’t surprise me. There is certainly an incentive for dishonesty in such a competitive market. Another factor that may be increasing ability to make all cash offers in low and medium cost markets is the doubling of the cap for 401k loans last year.

Well it's not really dishonesty in my view.  They're just risking their earnest money deposit if they can't fulfill the contract.  Of course, earnest money deposits are apparently huge these days, so I still don't understand it fully.

Back in The Old Days (tm), we put down earnest money when we wrote the contract.  I learned recently from a new home buyer that nowadays they write the earnest money into the contract but the funds are only supplied if they win the bid.  And I think I read here that now the approach is to offer a bunch, have them accept your offer out of the pile, then whittle it down with repairs ("Yeah, we'll pay you $400K for this, but our inspector says you need to replace the HVAC and roof.") after all the other bidders have wandered off to the next house up for auction sale.

Kids these days.

Sellers can, and should, require evidence of funds from prospective buyers before accepting an offer. Things such bank account and or brokerage statements. And if my memory serves correctly, these are sent along with a signed statement or some such thing. I suppose there's nothing preventing a buyer from forging these statements and lying, but this would cause a host of legal issues for them.

ETA: RE whittling down the price over repairs: If the sellers didn't adequately disclose major issues then that's a problem of their own creation.

I consider it dishonest to make an offer that’s all cash when you have to finance to get the funds. And yes, sellers should require proof of funds before accepting a cash offer. We did.

[catccc]

Maybe waiving the financing contingency is what people mean when they say cash offers?  I could certainly supply bank and brokerage statements and waive the financing contingency if it would make my offer more attractive.  The tax hit on liquidating investments sounds yucky to me. So I still would want to get a mortgage, though, but does the buyer care if they get their $?

Also, re: sellers not disclosing major issues... People are waiving all sorts of contingencies, inspections, etc.  It's crazy around here.  I guess they figure if they are going to offer $100K over asking already, why bother haggling over a $10K repair?  IDK.  Like I said, it's crazy.

[clarkfan1979]

I have been posting my rentals on zillow. I'm pretty sure they sell your information. I'm now getting hammered with phone calls from investors wanting to buy my houses.

Zillow does provide some analytics (number of clicks). For my Fort Collins rental, I got around 300 clicks on day 1. For Kauai, about the same. For Fort Myers, FL, I got 1,500 clicks on day 1. I got about 50 requests for a showing in about 3 days.

I think this cycle is different. In 2006, unqualified buyers were buying houses and apartment complexes were experiencing vacancy. During this cycle it seems like rentals are tight as well, at least for my areas.

[Dicey]

I have been posting my rentals on zillow. I'm pretty sure they sell your information. I'm now getting hammered with phone calls from investors wanting to buy my houses.

Zillow does provide some analytics (number of clicks). For my Fort Collins rental, I got around 300 clicks on day 1. For Kauai, about the same. For Fort Myers, FL, I got 1,500 clicks on day 1. I got about 50 requests for a showing in about 3 days.

I think this cycle is different. In 2006, unqualified buyers were buying houses and apartment complexes were experiencing vacancy. During this cycle it seems like rentals are tight as well, at least for my areas.

Everybody sells your information. I used my desktop to look up an acronym for a very specialized insurance company I wanted to recommend to someone on the forum. Now I get bright orange ads for them every time I open my phone. Grr...

[ResolLaTot]

@catccc and @JetBlast , I am familiar with the nuts and bolts of real estate transactions in Illinois and Ohio. An all cash offer does not mean the buyer is REQUIRED to use their cash, merely to demonstrate they have cash resources to push the deal through to close -regardless of financing.  It is common for cash offers, in the end, to close with financing (i.e. a mortgage). There is nothing shady about it. The buyer is giving the seller assurances that the closing will not be imperiled or delayed by the mechanics of obtaining a mortgage.

 If the cash buyer is seeking financing that doesn't materialize by the agreed upon closing date, they must perform using their cash. They are free to acquire financing after close in this case. Again, there is nothing shady or dishonest about it.

I hope I am not over-explaining or misconstruing the point in question. There is terminology in near every domain that is misleading to outsiders. A family member of mine worked for years in real estate, becoming so familiar with their domain they lost touch with how an outsider/their client might interpret "all cash offer". This family member was blind sided by the seller's disappointment at the closing table. They thought they were getting a duffel bag full of cash!

-RLT

[catccc]

@catccc and @JetBlast , I am familiar with the nuts and bolts of real estate transactions in Illinois and Ohio. An all cash offer does not mean the buyer is REQUIRED to use their cash, merely to demonstrate they have cash resources to push the deal through to close -regardless of financing.  It is common for cash offers, in the end, to close with financing (i.e. a mortgage). There is nothing shady about it. The buyer is giving the seller assurances that the closing will not be imperiled or delayed by the mechanics of obtaining a mortgage.

 If the cash buyer is seeking financing that doesn't materialize by the agreed upon closing date, they must perform using their cash. They are free to acquire financing after close in this case. Again, there is nothing shady or dishonest about it.

I hope I am not over-explaining or misconstruing the point in question. There is terminology in near every domain that is misleading to outsiders. A family member of mine worked for years in real estate, becoming so familiar with their domain they lost touch with how an outsider/their client might interpret "all cash offer". This family member was blind sided by the seller's disappointment at the closing table. They thought they were getting a duffel bag full of cash!

-RLT

Thanks for your input!  I thought this was the case.  And I don't think it is shady at all - you could do all cash, you say so.  And LOL at a duffel bag full of cash!!

[JetBlast]

@catccc and @JetBlast , I am familiar with the nuts and bolts of real estate transactions in Illinois and Ohio. An all cash offer does not mean the buyer is REQUIRED to use their cash, merely to demonstrate they have cash resources to push the deal through to close -regardless of financing.  It is common for cash offers, in the end, to close with financing (i.e. a mortgage). There is nothing shady about it. The buyer is giving the seller assurances that the closing will not be imperiled or delayed by the mechanics of obtaining a mortgage.

 If the cash buyer is seeking financing that doesn't materialize by the agreed upon closing date, they must perform using their cash. They are free to acquire financing after close in this case. Again, there is nothing shady or dishonest about it.

I hope I am not over-explaining or misconstruing the point in question. There is terminology in near every domain that is misleading to outsiders. A family member of mine worked for years in real estate, becoming so familiar with their domain they lost touch with how an outsider/their client might interpret "all cash offer". This family member was blind sided by the seller's disappointment at the closing table. They thought they were getting a duffel bag full of cash!

-RLT

I don't think it's shady if the buyer is willing and able to fulfill with cash if they can't arrange financing within the agreed timeline. 

If they are not willing or able and intend to just forfeit their earnest money in the event they can't get the financing done, I do think that's shady.  While it abides by the letter of the contract, I'm sure most buyers would rather just get the deal done and may have selected a different offer if they knew the sale was actually contingent on financing.  People don't list their home for sale in hopes of collecting earnest money on deals that fall through.

[redbird]

Back in The Old Days (tm), we put down earnest money when we wrote the contract.  I learned recently from a new home buyer that nowadays they write the earnest money into the contract but the funds are only supplied if they win the bid.

I bought my first house in the early 2000s. I've now bought property in multiple US states. I've never paid earnest money up front. I've always paid it only if and after I won the bid.

[jeromedawg]

We made an offer on a home earlier today - the home is listed just under $900 and we offered $925k w/ no inspection or appraisal contingency 30+ days rentback and $3k escalation. Seller's agent says there are offers of $950k on the table supposedly... in the same neighborhood there's a home down the street that's 700sq ft bigger (they added on an extra living area) and on a slightly bigger lot but backing a street and they just lowered the price to $950k. I'm scratching my head that anyone would offer more on this place than they would on the other place. They're furnished/appointed the same IMO. But I guess people are willing to pay the same price or more for less square footage and the 'privilege' of maintaining a pool for the sake of not having to live backed up to a street (I think it can get busy on that street but I don't think it's as bad as other streets around here). The last home that sold in the neighborhood is 1800sq ft (also added a living area/room on) and the lot is even bigger than both aforementioned homes (no pool). That one sold for $960k. I viewed it and it wasn't that nicely appointed IMO. So apparently the interior square footage means very little to the people outrageously overbidding on these homes...


EDIT: after thinking about it more, we may have to classify ourselves as "people outrageously overbidding on these homes" as we're now considering just revising and increasing our offer to $950-$960k :(

[jeromedawg]

BTW: What do you guys think of this? https://www.youtube.com/watch?v=VCHS4IW0LBo

In summary, his opinion (based on data he is looking at and explaining through the video) is that it's not institutional investors (Blackrock, etc) who are buying up all the homes. It's small time investors who are essentially speculating and driving home prices up... presumably the data he's gathering is excluding homeowners with one primary home. It is interesting that the activity of the institutional investors appears to have declined though.

[chemistk]

BTW: What do you guys think of this? https://www.youtube.com/watch?v=VCHS4IW0LBo

In summary, his opinion (based on data he is looking at and explaining through the video) is that it's not institutional investors (Blackrock, etc) who are buying up all the homes. It's small time investors who are essentially speculating and driving home prices up... presumably the data he's gathering is excluding homeowners with one primary home. It is interesting that the activity of the institutional investors appears to have declined though.

An interesting analysis - I fully agree that there is a glaring hole in his narrative: what's the gross # of homes that are being sold to investors vs. owner-occupied buyers? And what are those numbers relative to the total housing market activity per year?

As for why institutional investors are sitting on the sidelines? Well, Blackrock increased their investment at least $0.5Bn YOY and Blackrock isn't the only game in town, so I'd hardly call that sitting on the sidelines. The other two dedicated REITs are probably waiting because they can wait - it's so much more difficult to buy a home right now and I'm sure they don't want to overbid on every property & waste time losing out on homes.

I disagree with his confidence that this is a bubble though - part of the challenge is that there is little inventory, and when you can't buy another home after you sell your primary then what's the incentive to sell?

[iris lily]

I know there are a lot of people in America with a lot of money, but I don't think there are *that* many.

I think what's happening is that people making "cash" offers are essentially just waiving the financing contingency.  They're taking on the risk that they can't get a mortgage in order to win the bidding wars.

Desperate times and all that.


More and more I think this market is nuts and am going to advise my son to bide his time.

It wouldn’t surprise me. There is certainly an incentive for dishonesty in such a competitive market. Another factor that may be increasing ability to make all cash offers in low and medium cost markets is the doubling of the cap for 401k loans last year.

Well it's not really dishonesty in my view.  They're just risking their earnest money deposit if they can't fulfill the contract.  Of course, earnest money deposits are apparently huge these days, so I still don't understand it fully.

Back in The Old Days (tm), we put down earnest money when we wrote the contract.  I learned recently from a new home buyer that nowadays they write the earnest money into the contract but the funds are only supplied if they win the bid.  And I think I read here that now the approach is to offer a bunch, have them accept your offer out of the pile, then whittle it down with repairs ("Yeah, we'll pay you $400K for this, but our inspector says you need to replace the HVAC and roof.") after all the other bidders have wandered off to the next house up for auction sale.

Kids these days.

Sellers can, and should, require evidence of funds from prospective buyers before accepting an offer. Things such bank account and or brokerage statements. And if my memory serves correctly, these are sent along with a signed statement or some such thing. I suppose there's nothing preventing a buyer from forging these statements and lying, but this would cause a host of legal issues for them.

ETA: RE whittling down the price over repairs: If the sellers didn't adequately disclose major issues then that's a problem of their own creation.

We bought a condo for cash last fall and were required to furnish a brokerage account statement.