Author Topic: Not accepting offers at asking price should be illegal  (Read 5177 times)

Roland of Gilead

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Re: Not accepting offers at asking price should be illegal
« Reply #50 on: May 04, 2021, 07:48:30 AM »
Boise Cascade is winning.  Their stock has gone from $20 to $65 a share in the past year because they have raised prices on lumber up to 500%.

If drug companies do that kind of shit during a crisis they get hauled before Congress or tossed in jail but it is ok for lumber?

GuitarStv

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Re: Not accepting offers at asking price should be illegal
« Reply #51 on: May 04, 2021, 08:10:30 AM »
Getting back to the crazy RE market conditions, I don't understand why the demand doesn't wane.  Why do so many people want to subject themselves to such a cruel market?  Where are the sellers planning to go?  Don't they realize that by selling they will become buyers?  The gains from their sale will just evaporate when they go shopping for a replacement.  So, my question is "Who's actually winning?" in this market?

It's the bitcoin effect.  Prices go up for a while, people see rising prices and decide that prices will always rise, then they become terrified that they'll miss out on all the easy money so dump more cash into the market . . . this makes prices rise more and causes more people to dump money into the market.  Then the people who just stupidly plowed money in because everyone else was doing it look like geniuses which convinces more people to do the same.

Works great for a while.

maizefolk

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Re: Not accepting offers at asking price should be illegal
« Reply #52 on: May 04, 2021, 08:23:03 AM »
So, my question is "Who's actually winning?" in this market?

People whose kids have left home for work/college and are downsizing.
People with newly remote jobs who are selling houses in VHCOL cities and locating to HCOL/MCOL cities.
People who just inherited the family house when their parents passed away.
People who started real estate developments/homebuilding pre-COVID and are finally getting their houses ready to sell.
People looking to time the market by selling now and renting at much lower prices than just a mortgage payment, let alone maintenance, in many VHCOL cities.

I'm sure there are other categories as well.

omachi

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Re: Not accepting offers at asking price should be illegal
« Reply #53 on: May 04, 2021, 08:35:55 AM »
Homogenous commodity vs unique one I don't think matters.  If you go back through human history you would see that the idea of a fixed/constant price at all is a very modern one.  Haggling and bargaining has usually been a much more normal state for people selling/trading any goods.

maizefolk said it for me on price discovery with homogenous goods.

I was also going to add to my post that housing may seem odd because much of the west doesn't seem to haggle anymore, many places even over large purchases like new cars, but decided against it. While the past is instructive, we live now and sell standardized goods at more or less fixed prices. Yet houses are anything but homogenous, especially used ones. Even the houses in cookie cutter neighborhoods end up with prices that can differ by a good amount after people live in them for any period of time. So I didn't think anybody actually thought a house listing was a buy it now sort of price, much less that it'd be unethical to accept a higher offer.

GreenEggs

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Re: Not accepting offers at asking price should be illegal
« Reply #54 on: May 04, 2021, 08:38:58 AM »
So, my question is "Who's actually winning?" in this market?

People whose kids have left home for work/college and are downsizing.
People with newly remote jobs who are selling houses in VHCOL cities and locating to HCOL/MCOL cities.
People who just inherited the family house when their parents passed away.
People who started real estate developments/homebuilding pre-COVID and are finally getting their houses ready to sell.
People looking to time the market by selling now and renting at much lower prices than just a mortgage payment, let alone maintenance, in many VHCOL cities.

I'm sure there are other categories as well.




Don't forget the Realtors.  ;)

Roland of Gilead

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Re: Not accepting offers at asking price should be illegal
« Reply #55 on: May 04, 2021, 08:42:31 AM »

Don't forget the Realtors.  ;)

I am not 100% sure on that one.  There are a ton of realtors and not many houses on the market.  I read somewhere (might not be true) that in some states there were 2 realtors for each house being listed for sale.

ender

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Re: Not accepting offers at asking price should be illegal
« Reply #56 on: May 04, 2021, 08:46:35 AM »

Don't forget the Realtors.  ;)

I am not 100% sure on that one.  There are a ton of realtors and not many houses on the market.  I read somewhere (might not be true) that in some states there were 2 realtors for each house being listed for sale.

Yup.

Realtors make more on volume than they do on price, by far.

It's much better to sell 2x houses than to sell one house for 20% more (of course, if it's 1 at twice the cost it's perhaps better for them, due to hassle factors).

jeromedawg

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Re: Not accepting offers at asking price should be illegal
« Reply #57 on: May 04, 2021, 08:50:26 AM »
Everyone hears about the low-interest rates and the high cost of lumber being part of the housing supply problem.  But nobody mentions what shutting down the Southern border has done to create the labor shortage.  Building housing requires a lot of hard-working low skilled labor. 


ICE shut down immigration under Trump and it seems Biden has continued to keep immigrants out. 




Getting back to the crazy RE market conditions, I don't understand why the demand doesn't wane.  Why do so many people want to subject themselves to such a cruel market?  Where are the sellers planning to go?  Don't they realize that by selling they will become buyers?  The gains from their sale will just evaporate when they go shopping for a replacement.  So, my question is "Who's actually winning?" in this market?

Do you have any numbers on the labor shortage? Interesting perspective there and it does make sense.

Honestly, I think a lot of people are in a mode of desperation and FOMO - the idea is that prices are going to keep going up so we need to get in NOW. I can't help but think there's some form of overextending going on for the people who are that desperate. Other than that, I heard there has been an uptick in investors (and particularly institutional....https://www.wsj.com/articles/if-you-sell-a-house-these-days-the-buyer-might-be-a-pension-fund-11617544801) that are coming in and scooping up houses.

GreenEggs

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Re: Not accepting offers at asking price should be illegal
« Reply #58 on: May 04, 2021, 09:07:26 AM »
Everyone hears about the low-interest rates and the high cost of lumber being part of the housing supply problem.  But nobody mentions what shutting down the Southern border has done to create the labor shortage.  Building housing requires a lot of hard-working low skilled labor. 


ICE shut down immigration under Trump and it seems Biden has continued to keep immigrants out. 




Getting back to the crazy RE market conditions, I don't understand why the demand doesn't wane.  Why do so many people want to subject themselves to such a cruel market?  Where are the sellers planning to go?  Don't they realize that by selling they will become buyers?  The gains from their sale will just evaporate when they go shopping for a replacement.  So, my question is "Who's actually winning?" in this market?

Do you have any numbers on the labor shortage? Interesting perspective there and it does make sense.

Honestly, I think a lot of people are in a mode of desperation and FOMO - the idea is that prices are going to keep going up so we need to get in NOW. I can't help but think there's some form of overextending going on for the people who are that desperate. Other than that, I heard there has been an uptick in investors (and particularly institutional....https://www.wsj.com/articles/if-you-sell-a-house-these-days-the-buyer-might-be-a-pension-fund-11617544801) that are coming in and scooping up houses.


I don't have any numbers, but it seems that I've heard labor has been an issue for all industries during Covid, and industries relying on immigrant labor have been especially hard-hit by shortages. I think Ag and Construction are the main two. 


It seems that we might need to consider opening the borders or consider freeing nonviolent offenders as a source of cheap labor.  It would seem that either move could be good for gaining democratic votes too.  But, that's getting off-topic.

Roland of Gilead

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Re: Not accepting offers at asking price should be illegal
« Reply #59 on: May 04, 2021, 09:11:05 AM »
Is it lack of immigration causing labor problems or is it the stimulus payments and fairly generous unemployment benefits?

GreenEggs

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Re: Not accepting offers at asking price should be illegal
« Reply #60 on: May 04, 2021, 09:18:54 AM »
Is it lack of immigration causing labor problems or is it the stimulus payments and fairly generous unemployment benefits?




I'll go with C - "All of the above" 

FINate

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Re: Not accepting offers at asking price should be illegal
« Reply #61 on: May 04, 2021, 09:21:03 AM »
Residential construction employment never fully recovered from the Great Recession. See Figure 3 here.

Malcat

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Re: Not accepting offers at asking price should be illegal
« Reply #62 on: May 04, 2021, 09:50:03 AM »
Is it lack of immigration causing labor problems or is it the stimulus payments and fairly generous unemployment benefits?

Canada has been paying out 24K/yr to people unemployed due to covid, and it has contributed to our already short labour market, but it hasn't slowed building as far as I know of.

maizefolk

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Re: Not accepting offers at asking price should be illegal
« Reply #63 on: May 04, 2021, 10:00:29 AM »
Net border crossings into the USA from Mexico have been declining essentially ever since the turn of the century.

Jesstache

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Re: Not accepting offers at asking price should be illegal
« Reply #64 on: May 04, 2021, 10:40:01 AM »
So, my question is "Who's actually winning?" in this market?

People whose kids have left home for work/college and are downsizing.
People with newly remote jobs who are selling houses in VHCOL cities and locating to HCOL/MCOL cities.
People who just inherited the family house when their parents passed away.
People who started real estate developments/homebuilding pre-COVID and are finally getting their houses ready to sell.
People looking to time the market by selling now and renting at much lower prices than just a mortgage payment, let alone maintenance, in many VHCOL cities.

I'm sure there are other categories as well.

In our case, we're listing our property just outside the bay area in a week and we are going to move back into our previous house in OR that we've been renting out for the past 3 years (we relocated out of state for a job and knew it was only for a few years, lucky timing that now is when it works out for us to move back). 

Don't also forget landlords who own rental properties that can sell and net a tidy profit after taxes.  We have strongly considered selling one of our other rental properties but the tax hit this year would be larger than if we wait until FIRE.

One thing to mention about list price vs sales price.  We have seen the comps in our neighborhood and we know our house is likely to sell above asking.  How much is anyone's guess but we're seeing $30k-$100k in the comps.  Talking with our realtor, what we actually list at is heavily dependent on what the property will actually appraise for.  The fact that people are willing to waive appraisal and pay above the amount most buyers can get a loan for by bringing tons of cash to the table can't be assumed when setting your list price, according to her, even if that's what they're seeing.

Michael in ABQ

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Re: Not accepting offers at asking price should be illegal
« Reply #65 on: May 04, 2021, 07:48:39 PM »
My mom just bought a new car recently. She remarked how all the dealerships were practically empty of new cars but had rows and rows of used cars. Lots of people are flush with cash and recognize that inflation is going up so they might as well buy now.

There are a lot of markets where prices have just continued to rise year over year. Even if things seem overpriced at the moment, waiting longer doesn't mean they're going to drop.

I keep thinking there will be a wave of foreclosures once the various moratoriums end, but there doesn't seem to be anything yet.

FINate

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Re: Not accepting offers at asking price should be illegal
« Reply #66 on: May 04, 2021, 08:08:01 PM »
I keep thinking there will be a wave of foreclosures once the various moratoriums end, but there doesn't seem to be anything yet.

I think this is unlikely because the primary pandemic related mortgage relief is forbearance rather than a simple foreclosure moratorium. For those experiencing COVID-19 related hardship, missed payments are essentially tacked on to the end rather than being due as a lump sum. If financial hardship persist past the forbearance period (typically 12 months, but up to 18 months in some cases) I suppose this could result in a wave of foreclosures, though it seems likely that dates will be extended as needed to prevent mass disruption.

ysette9

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Re: Not accepting offers at asking price should be illegal
« Reply #67 on: May 04, 2021, 08:53:06 PM »
We moved to Seattle last summer and are trying to find a SFH to rent. The market is hot here, as it seems to be in a lot of places right now. Apparently in a move to try to reduce discrimination in landlords selecting who to rent to, the law here is that landlords have to rent to the first qualified applicant who gets their paperwork in. In our limited experience so far that seems to make for some weird situations.

Previously we were a bit arrogant when applying for a rental knowing that we have stellar credit, great income, no debt, non smokers, no pets, blah blah blah. Now it seems that this doesn't matter except that it means we pass the minimum bar. Now she who has the fastest fingers on the laptop (and the fastest internet connection) wins. We got our applications in in under 30 minutes from when the rental application link went live, and we were beat out by someone else with faster fingers. I wish it were a bidding situation where we could have offered to pay more per month for rent as you would happen in a house purchase situation. As it is one person got lucky, a bunch of other people walked away empty-handed and frustrated (as the OP), and the landlord missed out on potential additional monthly income.

I'm not sure what the answer is. Tight markets seem to be tough all around.

Roland of Gilead

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Re: Not accepting offers at asking price should be illegal
« Reply #68 on: May 04, 2021, 09:09:58 PM »
I thought when Seattle did that first come first serve tenant stuff that landlords would just set the minimum credit score to 800 or something to weed out deadbeats and the whole thing would backfire on Seattle (as most things Seattle does do).

okonumiyaki

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Re: Not accepting offers at asking price should be illegal
« Reply #69 on: May 04, 2021, 09:38:56 PM »
In Australia a fair % of houses get sold by auction, especially if in hot market or relatively unique.  In Sydney think it is around 40%.  Would seem to solve the issue. 

Cassie

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Re: Not accepting offers at asking price should be illegal
« Reply #70 on: May 05, 2021, 12:18:33 AM »
Due to a divorce we sold our house and I bought a condo. There were 6 offers on the condo. The asking price was 11k over what it would appraise for and bidders were told you must have the money to bridge the difference.  I ended up in a bidding war with another person. I paid 20k over asking. Because I had money I could do that and I was most likely to get the mortgage as I was only borrowing 85k.  I priced our house 10k under because I wanted a fast sale. We had 33 showings in 3 days and 4 offers. We took the offer that was most likely to close and was 30k over. In the end we came down 13k more for repairs.  Because my exís loan fell through at the last minute my condo sellers learned 4 days before closing that it wouldnít happen. They gave me a week to be in escrow. I wasnít going to screw around and lose the condo I really wanted.

Michael in ABQ

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Re: Not accepting offers at asking price should be illegal
« Reply #71 on: May 05, 2021, 06:39:37 AM »
We moved to Seattle last summer and are trying to find a SFH to rent. The market is hot here, as it seems to be in a lot of places right now. Apparently in a move to try to reduce discrimination in landlords selecting who to rent to, the law here is that landlords have to rent to the first qualified applicant who gets their paperwork in. In our limited experience so far that seems to make for some weird situations.

Previously we were a bit arrogant when applying for a rental knowing that we have stellar credit, great income, no debt, non smokers, no pets, blah blah blah. Now it seems that this doesn't matter except that it means we pass the minimum bar. Now she who has the fastest fingers on the laptop (and the fastest internet connection) wins. We got our applications in in under 30 minutes from when the rental application link went live, and we were beat out by someone else with faster fingers. I wish it were a bidding situation where we could have offered to pay more per month for rent as you would happen in a house purchase situation. As it is one person got lucky, a bunch of other people walked away empty-handed and frustrated (as the OP), and the landlord missed out on potential additional monthly income.

I'm not sure what the answer is. Tight markets seem to be tough all around.

We tried to get permission from our landlord to run a business from our home. No customers, no employees, just storing some products on shelves in the garage and mailing them out via the same UPS/FedEx trucks that already drive down the street daily. When I went to drop off a letter with the owner of the management company she said they are receiving an average of 17 applications on each SFH for rent. This is in Albuquerque, not exactly a red hot coastal market.


Let supply and demand function. Yes it's frustrating when other people are willing to pay more, but the alternative isn't better in the long run. The market will find a way around whatever policy government puts in place. If you were on the other side it sure would be frustrating to find out several buyers were willing to pay more than the asking price but you were forced to sell at the asking price.

Samuel

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Re: Not accepting offers at asking price should be illegal
« Reply #72 on: May 05, 2021, 11:37:41 AM »
We moved to Seattle last summer and are trying to find a SFH to rent. The market is hot here, as it seems to be in a lot of places right now. Apparently in a move to try to reduce discrimination in landlords selecting who to rent to, the law here is that landlords have to rent to the first qualified applicant who gets their paperwork in. In our limited experience so far that seems to make for some weird situations.

Previously we were a bit arrogant when applying for a rental knowing that we have stellar credit, great income, no debt, non smokers, no pets, blah blah blah. Now it seems that this doesn't matter except that it means we pass the minimum bar. Now she who has the fastest fingers on the laptop (and the fastest internet connection) wins. We got our applications in in under 30 minutes from when the rental application link went live, and we were beat out by someone else with faster fingers. I wish it were a bidding situation where we could have offered to pay more per month for rent as you would happen in a house purchase situation. As it is one person got lucky, a bunch of other people walked away empty-handed and frustrated (as the OP), and the landlord missed out on potential additional monthly income.

I'm not sure what the answer is. Tight markets seem to be tough all around.

I haven't moved apartments since this went into effect but I'm definitely not looking forward to re-entering the fray. It seems like this law will negatively impact me because I'm a pretty model tenant with solid income and financials who likes to rent well below their means. I qualify for expensive fancy apartments with more stringent requirements but will instead be competing for middle and lower range apartments with looser requirements where my trump cards are now worthless.

In practice these laws seem pretty difficult to enforce, impacting honest landlords but not the dishonest ones willing to fib about the order in which applications are received.

KateFIRE

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Re: Not accepting offers at asking price should be illegal
« Reply #73 on: May 05, 2021, 04:07:48 PM »
To anyone who complains about housing prices, I suggest some serious self examination. Do you have cable? A giant-screen TV? Anything Apple, especially a late-model I-phone? Monthly subscriptions? A fancy car? Eat out? Use Door Dash? Buy brand-new clothes? Take expensive vacations? Further, are you doing everything you can to maximize your income?

This is a mustachian forum, of course we are frugal. Don't have cable, don't have one subscription, don't really buy much of anything. Maybe that's why this jump in home prices hurts even more. If we weren't so fugal we might be happier offering $40K over asking price and pulling numbers out of thin air just to win. I make $65K a year, but home prices are rising at the same pace as my income... if I saved 100%. People are making more money off assets than working.

KateFIRE

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Re: Not accepting offers at asking price should be illegal
« Reply #74 on: May 05, 2021, 05:20:56 PM »
I agree with a lot of posters that FOMO is driving up prices. There is a fear that inflation is rising and this will continue. If you don't buy now, you will be paying even more in 3 months.

The housing shortage is a bit surprising to me... where did these people come from? When you ask, people say California, but then why is there a shortage of homes in California too! Everyone who buys a house was living somewhere else before. There are more homes (139.64 million in 2019) than households (128.58 million in 2019) in the US so not much of a shortage, but possibly the percentage of vacant homes is higher. I know that there is some temporary situations of people occupying 2 homes right now. My sister bought a home last summer and renovated it while she lived in her rental. Our neighbor bought a house a month ago and the rental that they were living in needs some updates so is vacant now. My grandma owns two homes, but won't sell until she dies to avoid the capital gains (when you die, the home steps up to current values). The home is vacant.

I also think there is a rise in single adult households and singles buying homes. Maybe this increased the number of households, since it can't be attributed to immigration or a lowered death rate (US death rate increased 16% in 2020). Statistics show that many homeowners are the older generations.

I also read about the 18 year housing cycle... this theory that housing prices peak every 18 years on average... according to the article we will reach the peak in 2024... sounds about right! Although I wonder how the pandemic sped up or held back this cycle.

Unfortunately I can't wait for this housing market to crash because I have a family and time is money... can't spend 3 years without stability for our kids. We will keep trying to buy in this boom and just live there forever!!
« Last Edit: May 05, 2021, 05:24:18 PM by KateFIRE »

Malcat

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Re: Not accepting offers at asking price should be illegal
« Reply #75 on: May 05, 2021, 06:31:59 PM »
Apparently up here in Canada, they're already reporting that the bidding wars are easing up as the end of covid is in sight and supply is starting to flow back into the market.

I'll be curious to see what happens in the US.

It's always really interesting to compare and contrast since the regulations are so different, and yet the issue has been so parallel.

Dicey

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Re: Not accepting offers at asking price should be illegal
« Reply #76 on: May 05, 2021, 11:12:28 PM »
To anyone who complains about housing prices, I suggest some serious self examination. Do you have cable? A giant-screen TV? Anything Apple, especially a late-model I-phone? Monthly subscriptions? A fancy car? Eat out? Use Door Dash? Buy brand-new clothes? Take expensive vacations? Further, are you doing everything you can to maximize your income?

This is a mustachian forum, of course we are frugal. Don't have cable, don't have one subscription, don't really buy much of anything. Maybe that's why this jump in home prices hurts even more. If we weren't so fugal we might be happier offering $40K over asking price and pulling numbers out of thin air just to win. I make $65K a year, but home prices are rising at the same pace as my income... if I saved 100%. People are making more money off assets than working.
Dear @KateFIRE, when you've read as many posts on thus forum as I have, you will know that loads of folks are not frugal, [shocker] even on this forum.

I was never a high earner either. Here's a synopsis of what I did. I bought my first house at age 30 in the town i grew up in, which is not where i was living. I rented it out. Sold it 8 years later for very little profit, but I learned a ton. Bought the next property (where I did live) on a short sale and moved in. Doubled my money in 4 years. Lather, rinse repeat.

Everyone has to start somewhere, but starting at the top is very risky. Don't let FOMO lead to a bad decision.

BTW, your last sentence is kind of a head scratcher. That is the mustachian ideal, whether you're a homeowner or not. That's what people are referring to when they say, "This shit works", because it does. It really does.

KateFIRE

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Re: Not accepting offers at asking price should be illegal
« Reply #77 on: May 06, 2021, 06:32:10 AM »
BTW, your last sentence is kind of a head scratcher. That is the mustachian ideal, whether you're a homeowner or not. That's what people are referring to when they say, "This shit works", because it does. It really does.

Workers and consumers make our world go round, not asset owners and investors. Making 4%/yearly off an investment is a sustainable pull from a healthy economy. When asset holders are pulling 20% to 100% away from workers, thatís not healthy! US household net worth increase $6.9 trillion in 4th quarter of 2020. US GDP increase by 309.2 billion in the same quarter. Here is an old article, but still relevant: https://www.google.com/amp/s/www.forbes.com/sites/jessecolombo/2018/08/24/u-s-household-wealth-is-experiencing-an-unsustainable-bubble/amp/

Dicey

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Re: Not accepting offers at asking price should be illegal
« Reply #78 on: May 06, 2021, 07:43:57 AM »
BTW, your last sentence is kind of a head scratcher. That is the mustachian ideal, whether you're a homeowner or not. That's what people are referring to when they say, "This shit works", because it does. It really does.

Workers and consumers make our world go round, not asset owners and investors. Making 4%/yearly off an investment is a sustainable pull from a healthy economy. When asset holders are pulling 20% to 100% away from workers, thatís not healthy! US household net worth increase $6.9 trillion in 4th quarter of 2020. US GDP increase by 309.2 billion in the same quarter. Here is an old article, but still relevant: https://www.google.com/amp/s/www.forbes.com/sites/jessecolombo/2018/08/24/u-s-household-wealth-is-experiencing-an-unsustainable-bubble/amp/
Hmmm, my first thought is, if you really believe that, why are you here? Mustachians are definitely owners and investors who eschew consumerism. My second thought is that if you believe it's unsustainable per the article you quoted, why are you worrying? Just plan on buying during the next downturn.

KateFIRE

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Re: Not accepting offers at asking price should be illegal
« Reply #79 on: May 06, 2021, 08:35:49 AM »
One thing Iíve learned is that things last a lot longer than I think! I have also tried to time things before and Iím really bad at it! So even though I think that this is a housing bubble, Iím not going to wait it out in my momís basement. Lol

I donít think itís anti mustachian to value workers above investors. I appreciate as an investor we are profiting off of others work and we shouldnít starve the workers with no assets. Mustachian teaches to save 25 times your yearly expenses to generate one year 4%. Taking out a mortgage of 6x your income and generating 1 year of income gains in net worth appreciation is okay to question! Donít want to be blind!

Jon Bon

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Re: Not accepting offers at asking price should be illegal
« Reply #80 on: May 06, 2021, 11:46:33 AM »
You have every right to be frustrated and frankly pissed off. I mean its bullshit for folks like yourself to put their lives on hold for a year, I completely agree with that.

I don't think this has much to do with investors making or losing money. During the last recession the Fed figured out they could just print money and assets would go up. So that is what they did then, and that is what they are doing now. Between that and 0% interest rates the "prices" of houses has exploded. Sure all of us sitting on houses love the price increases as unfair as it may be.

At some point folks are going to need to sell, and unless folks like yourself can afford buy it then well prices would need to adjust. Since wages are not going up 15% a year or whatever RE has done, it has to end at some point.

I guess I don't have a ton of advice for you other then stick to what you know. Focus on logic and not emotion, get all your ducks in a row and when something comes up go for it 100%. Be organized and professional, many of your competitors will not be!

Also for a fun read look up the south seas company, tulip mania, or john law. They are some good reads and help you keep your wits about you!

Good luck and good hunting.


Abe

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Re: Not accepting offers at asking price should be illegal
« Reply #81 on: May 07, 2021, 07:55:38 PM »
Unfortunately I can't wait for this housing market to crash because I have a family and time is money... can't spend 3 years without stability for our kids. We will keep trying to buy in this boom and just live there forever!!

Are there no places to rent in your area? You don't necessarily need a house to have stability, especially when housing prices are going up faster than rents in some areas.

Linea_Norway

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Re: Not accepting offers at asking price should be illegal
« Reply #82 on: May 08, 2021, 12:34:30 AM »
I agree with a lot of posters that FOMO is driving up prices. There is a fear that inflation is rising and this will continue. If you don't buy now, you will be paying even more in 3 months.

The housing shortage is a bit surprising to me... where did these people come from? When you ask, people say California, but then why is there a shortage of homes in California too! Everyone who buys a house was living somewhere else before. There are more homes (139.64 million in 2019) than households (128.58 million in 2019) in the US so not much of a shortage, but possibly the percentage of vacant homes is higher. I know that there is some temporary situations of people occupying 2 homes right now. My sister bought a home last summer and renovated it while she lived in her rental. Our neighbor bought a house a month ago and the rental that they were living in needs some updates so is vacant now. My grandma owns two homes, but won't sell until she dies to avoid the capital gains (when you die, the home steps up to current values). The home is vacant.

I also think there is a rise in single adult households and singles buying homes. Maybe this increased the number of households, since it can't be attributed to immigration or a lowered death rate (US death rate increased 16% in 2020). Statistics show that many homeowners are the older generations.

I also read about the 18 year housing cycle... this theory that housing prices peak every 18 years on average... according to the article we will reach the peak in 2024... sounds about right! Although I wonder how the pandemic sped up or held back this cycle.

Unfortunately I can't wait for this housing market to crash because I have a family and time is money... can't spend 3 years without stability for our kids. We will keep trying to buy in this boom and just live there forever!!

Where these people come from? I think many were living with their parents for a way too long time. Or living in a rental, maybe shared with others. If all these people now can get a mortgage, many will be willing to buy their own place. They are also competing against landlords who buy up houses for rentals. And like you say, many elderly are living in a (too) large house and don't move out of it, blocking the options for younger families to move into a bigger house. And indeed, more singels.

ender

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Re: Not accepting offers at asking price should be illegal
« Reply #83 on: May 08, 2021, 07:53:28 AM »
The housing shortage is a bit surprising to me... where did these people come from?

Population increasing over time with new housing starts dropping dramatically since 2006.

https://www.statista.com/statistics/219963/number-of-us-house-sales/

We're still even close to the number of new houses built in the early 2000s.

Botany Bae

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Re: Not accepting offers at asking price should be illegal
« Reply #84 on: May 08, 2021, 08:27:46 AM »
I know around here quite a few have sold to investors and they are still sitting empty 3-4 months later (not renting, nothing). You can look at the records and see who bought them, and driving by them reveals them empty and no remodeling happening. I'm guessing it's speculators hoping prices go up even more then they flip as-is, or those hoping to sell higher for development. We're in a rental shortage as well, and some recent zoning changes are allowing infill housing and teardowns for multi-family housing. A house on a large lot by us was torn down recently so a small apartment complex could go in.

The "We Buy Houses" folks are out in force, with every corner littered with their flyers. 

penguintroopers

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Re: Not accepting offers at asking price should be illegal
« Reply #85 on: May 09, 2021, 08:09:06 AM »
I can agree with the frustration. Two years ago we made the decision pay off all of our student debt ($103k) as something to get us prepared for buying our first home. Now I see that if we had just gotten a down payment together ASAP we would have been able to just ride the 30% appreciation to get us to a net balance between our assets and liabilities rather than owe nothing but have nothing... And this is just from appreciation alone, we wouldn't have to bust our butts on OT and shoveling $4k+ out the door every month.

I try to not let it sting me too much as there's no way we could have predicted crazy increases like this. We figured the appreciation would be something like 5% or so. We have been able to move states in that time period for a new job for myself, but seeing 10, 15, 20% increases YoY means we literally are loosing ground every time we try to put together a down payment, or at BEST just keeping up... and this is a household with two well compensated young professionals who are shoveling in every penny they can towards a down payment, and we haven't even gotten into how now appraisals are coming up short and buyers have to bridge the gap out of pocket.

I don't see how anyone can buy in this market unless they're already on the property ladder, have very large incomes, or have very large subsidies from parents. I'd love to hear how I'm just overly doom and gloom but the situation seems bleak.

And to everyone saying just wait for the dip, I've seen far too many stories like ours with buyers sidelined over the crazy prices to think that the current flow of people looking to buy will slow at any time, because once we see the slightest percent decrease those sidelined buyers are back in the market.

Dicey

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Re: Not accepting offers at asking price should be illegal
« Reply #86 on: May 09, 2021, 02:14:05 PM »
And to everyone saying just wait for the dip, I've seen far too many stories like ours with buyers sidelined over the crazy prices to think that the current flow of people looking to buy will slow at any time, because once we see the slightest percent decrease those sidelined buyers are back in the market.
The real estate market is currently in an extended frenzied situation. Frenzies tend to end badly for many. Sure, right now, your decision seems like the wrong one, but life is long and new opportunities will appear on the horizon. Try thinking of it as being red-shirted, not permanently sidelined. If nothing else, you have the chance to build a stronger financial foundation.

At 22, I was determined to buy my own house, and it took me until I was 30 to pull it off. That first house was a rental. I didn't buy a house (it was a tiny condo, actually) that I could live in myself until I was 38. At 63, I am real estate rich. I still believe if I had invested along the line of JLCollinsNH's Simple Path to Wealth strategy, I would have been better off. https://jlcollinsnh.com/stock-series/

Try to see this for the opportunity that it is, even if it doesn't seem so now.

Finances_With_Purpose

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Re: Not accepting offers at asking price should be illegal
« Reply #87 on: May 10, 2021, 11:02:52 PM »
It is for a different topic but they really need to raise interest rates to get a handle on this situation.   Way too much easy loan money out there which is why people can buy $800,000 homes on a $100,000 income.

I'm very curious about this because a lot of people say that lending standards have tightened (e.g. the hair dresser making $50k can no longer take a $600k loan or whatever).
How is this situation that much different? I guess more people are putting in way higher down payments? My lender told me I could take a loan out that was at least 5-6x my salary. It only takes one bit of long term job loss to really screw things over if I were to actually take a loan that big.

Lending standards may have tightened some versus 2008 in particular, however, it's now easy to get the cheapest money in history.  When rates are low, prices can go way up--because people can afford the payments even on a much lower income.  People aren't putting in higher down payments, they're just more willing to take on much larger principle balances because the interest is so low that the payments are low too.  As rates rise, you can't afford as much house on the same income.  If rates were higher, you might only get 2-4 times your salary, or less, depending upon how high rates went.   

Rising rates would absolutely help house prices to stop going so high.  Even though that's not the whole story.

Finances_With_Purpose

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Re: Not accepting offers at asking price should be illegal
« Reply #88 on: May 10, 2021, 11:04:14 PM »
Be mad at your local government and the NIMBYs for restricting the supply of housing.

And the national government, while you're at it, for restricting the rates of return, i.e., the interest rates.  (Can't have the rates go up on all that debt now, can they?  Especially when we're hitting the ATM up for a few trillion more per year...) 

Finances_With_Purpose

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Re: Not accepting offers at asking price should be illegal
« Reply #89 on: May 10, 2021, 11:45:16 PM »
Here's the only thing I know for an absolute certainty: I wish I had a time machine so that I could see where this is all going... 

I'm sorry @KateFIRE .  I really am.  This market is abysmal.  I don't envy you.

And for what it's worth, we're personally avoiding becoming buyers in this market because it's just too speculative and bananas to me. 

If anything, I can offer this encouragement: impossible things tend not to last forever.  This situation, whatever it is, isn't sustainable. 

At least we have the forums to commiserate/vent on.  I agree with @secondcor521 about how this ends: who knows, but likely one of those ways.  And @Michael in ABQ beat me to the point about why the government won't raise rates to slow this situation down.  And @Jon Bon is spot on with that advice.

For @penguintroopers , I have a story.  I was in your situation once.  I made the same mistake.  Could have bought a house for a very low price, and very affordable one to me then, that would easily list for north of $1M or more, even before this current run-up.  Only God knows what it might be worth today.  I didn't make that mistake again: I saved, gathered up a down payment, and bought rather than waiting for another bust.  In retrospect, it looks to have been a good move.  But don't let your near-miss get you down...there will be future opportunities. 

Here are my passing observations about this market:
1.  Supply is insanely low.  When we bought our house, we had numerous options--we even went under contract on a very similar house very close to here. 

But tonight, I did a test tonight to see, out of curiosity, how easy it would be to buy one like it now, since I would like to move for various reasons (but not far away).  We bought our (small) house for a reasonable price only a few years ago.  I hopped onto the real estate listings, and put in only a few criteria to filter house listings: size, bedrooms, lot size, and then the geographic area, of course.  There isn't a single house listed within many miles of here for less than 4x what we paid only a few years ago, but most are closer to 20x what we paid--or more.  There's simply zero supply.  I had to get really far away, in a cheaper direction (i.e. where wildlife drastically outnumber people), before it opened up even slightly--and even then the prices were absurd. 

Big neighborhoods close to here used to have dozens of houses for sale at any one time.  Now, it's 0-2, if that. 

Maybe supply dropped because of COVID.  And home-building restrictions.  And the fact that Americans and their employers all glob themselves into the same few dozen major urban areas.  And people didn't want to sell.  Whatever the reasons, prices will stay high as long as there are no houses to buy.  I don't know what I would pay for a house like this here, today...but I know exactly how many one could buy this week.  Zero.  (And I've been casually looking for months...it's constantly this way.) 

2.  Rates drive prices, too, and, as @Michael in ABQ mentioned, the government isn't going to do a (good) thing about that.  After all, that might actually cause a Congressman somewhere to have to a few extra minutes' work next year actually, I don't know, balancing a budget, finding more revenue, cutting expenses, or...any of the other things a Congressman purports do for a living.  We can't have that, now can we? 

3.  Real estate is acting more like an asset than a good.  Goods adjust to supply/demand, but instead, we're seeing enormous price spikes followed by more price spikes, with a lot of anecdotal evidence that investors, and even lots of foreign investors, are buying up the existing stock, especially in hot markets.  And assets go way up...and way down.  Housing is starting to look more like the S&P 500 and less like the price of a bar of gold, or a loaf of bread.  Who knows what next year will bring, though.

4.  Inflation is the elephant in the room.  Are house prices really going up...or are all prices going up?  And if so, how much so?  And what about wages?  Or is this just stagflation?  (Queue up time machine.)  I don't know about you guys, but several of my inflation hedges are getting off-the-charts returns this year.  Yet I also think purchasable housing has had a historically unbelievable supply constraint for whatever reasons. 

--

Regardless of how all of this plays out, the current imbalance seems more likely to swing back towards' buyers' favor (yay for @KateFIRE ) eventually than it does to go farther towards sellers, even if it does persist like this for longer than people expect.  But if we knew for sure, we wouldn't be here grousing about it...we would be out making money off of it.  And for the short term, who knows. 

One thing to consider: if you're wanting a house, consider putting your house/down-payment savings into things that move very closely with the housing market, rather than keeping them in cash.  I wouldn't normally recommend that, but as a protection, that might lock your savings into something that can hedge itself and keep your purchasing power in place, so you're at least not getting farther and farther behind. 

The fastest way to fix the national housing situation will be for supply to increase--people sell more houses--or demand to decrease--nobody wants to buy them anymore.  Or maybe we build a ton more, all of a sudden (supply increase).  Of those, supply seems the most likely to move first, since a supply shortage seems to be what got us here.  And houses can be built, especially at absurd prices.  But who knows...

Like you, @KateFIRE , we will be anxiously watching the housing market to see what happens next.  And wishing you the best.   

Fishingmn

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Re: Not accepting offers at asking price should be illegal
« Reply #90 on: May 11, 2021, 11:00:03 AM »
I just want to rant. It seems to me that there is some strategy to pricing low. It puts the seller in control and gets the buys to waive appraisals and inspections. Itís raising home prices everywhere and there are no consequences to this strategy because they donít have to sell the house to you even if you offer asking price and they have no other offers! Forcing the sale if they have no other offers and they refuse to sell would make sellers price higher and the power would come back to the buyer. People donít waive appraisals and inspections when they offer under asking price.

We have offered on 6 homes in Colorado. We have offered above asking price on every house. On Wednesday we offered on a house $11k over asking price. It had just been listed, but the buyers wanted to wait until Monday to collect offers all weekend so they didnít accept our offer. Our offer expired, but I bet they told the other buyers ďwe have another offer above asking priceĒ. This is a white lie because our offer expired!

Also every house that we have offered on we offer on twice, once the original offer and again after our realtor hears about how many offers they have over asking price and ďI donít feel comfortable saying, but significantly higherĒ offers. Then the realtor says ďdo you want to offer again?Ē, but what if these other offers are made up? They donít show you the other offers and the winning offer is not required to buy the home or pay anything if they decline after winning. There could be some major fraud with this system! You go to jail for years for stealing $10k from a store, but I bet there are plenty of realtors who manipulate bidding wars to the tune of thousands and have no consequences.

Another strategy with pricing low is that if they donít get the bidding war that they want, sellers can relist at a higher price. Relisting higher makes the home seem desirable, like you had so much attention you had to relist higher! Instead of lowering the price which says ďwe are having trouble selling, you can offer less than askingĒ. So listing low and getting the bidding war is a power move for sellers, but also leads to the potential for lying realtors and fraud.

Little late to the party but some thoughts as a Realtor - it's crazy in the Twin Cities too.

- Realtors are fiduciary's and can easily lose their license or be fined if found to be lying or committing fraud. Does it happen, yes - but this isn't commonplace.
- Yes, sellers have all the power right now. No seller should accept the first offer that comes in at list price. It's always in their best interest to wait multiple days and a Realtor who doesn't advise their client to do that is doing them a severe disservice. A listing agent owes allegiance to the seller, not the buyer.
- Your assertion that a full price offer should be automatically accepted is wrong. First off, the price is only 1 component of an offer. Financing, inspections, closing date, personal property and more go into an offer.
- It sounds like you are setting an offer deadline date. That's a bad idea in this market where sellers hold all the power. Your agent should advise against that.
- Your agent should be telling you how to use an Escalation Clause to make sure you are bidding confidently up to a price you are comfortable with. Example - I'll pay list price but will also beat all other offers by $2k up to a maximum of $X and seller must provide a copy of the next highest offer to validate the final price.
- Even if a listing agent does their best to price a property correctly the market is changing so quickly and there are so many buyers for nice houses that it's quite common to see many offers $50-100k+ over list price.

I'd encourage you to look at listings that have been on the market for 7+ days as those are either overpriced or need work and will have less competition. Or just keep at it - you'll eventually get one.

Good Luck!

Cassie

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Re: Not accepting offers at asking price should be illegal
« Reply #91 on: May 12, 2021, 09:40:48 AM »
We pick the offer most likely to close.

APBioSpartan

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Re: Not accepting offers at asking price should be illegal
« Reply #92 on: May 12, 2021, 09:46:25 PM »
I just want to rant. It seems to me that there is some strategy to pricing low. It puts the seller in control and gets the buys to waive appraisals and inspections. Itís raising home prices everywhere and there are no consequences to this strategy because they donít have to sell the house to you even if you offer asking price and they have no other offers! Forcing the sale if they have no other offers and they refuse to sell would make sellers price higher and the power would come back to the buyer. People donít waive appraisals and inspections when they offer under asking price.

We have offered on 6 homes in Colorado. We have offered above asking price on every house. On Wednesday we offered on a house $11k over asking price. It had just been listed, but the buyers wanted to wait until Monday to collect offers all weekend so they didnít accept our offer. Our offer expired, but I bet they told the other buyers ďwe have another offer above asking priceĒ. This is a white lie because our offer expired!

Also every house that we have offered on we offer on twice, once the original offer and again after our realtor hears about how many offers they have over asking price and ďI donít feel comfortable saying, but significantly higherĒ offers. Then the realtor says ďdo you want to offer again?Ē, but what if these other offers are made up? They donít show you the other offers and the winning offer is not required to buy the home or pay anything if they decline after winning. There could be some major fraud with this system! You go to jail for years for stealing $10k from a store, but I bet there are plenty of realtors who manipulate bidding wars to the tune of thousands and have no consequences.

Another strategy with pricing low is that if they donít get the bidding war that they want, sellers can relist at a higher price. Relisting higher makes the home seem desirable, like you had so much attention you had to relist higher! Instead of lowering the price which says ďwe are having trouble selling, you can offer less than askingĒ. So listing low and getting the bidding war is a power move for sellers, but also leads to the potential for lying realtors and fraud.

If youíre offering 11k over asking in Colorado, thatís likely your problem.  Homes here are going for 50-150k+ over asking

Dicey

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Re: Not accepting offers at asking price should be illegal
« Reply #93 on: May 12, 2021, 11:02:45 PM »
Hahaha! DH and I spent about an hour tonight poring through sales in our immediate area from the last 6 months. Amazing how much things are going for. The ONLY time anything goes for less than asking is if the property was on the market for more than two weeks, meaning it was insanely priced, a POS, or both. Anything that sells in less than a week (which is virtually everything) goes for significantly over asking. Significant, as in $100k or more, not $11k.

On one hand, you'd think it will crash. OTOH, building materials are so hard to come by that new housing starts are slow, meaning the supply deficit ain't going to get corrected any time soon. Egads!

JetBlast

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Re: Not accepting offers at asking price should be illegal
« Reply #94 on: May 24, 2021, 09:00:13 AM »
I can only imagine how frustrating this market is on the buyer side right now.  Everything near me is snapped up within a couple days of listing and usually bid up. I donít know how a first time homeowner financing through FHA or the VA stands a chance. Thatís got to feel like being part of Lord Cardiganís light brigade as you make offers.

Soon to be ex and I listed our townhouse on Friday in a slow growing metro at what I thought was a fair price. In line with recent comps in our neighborhood. Definitely not a lowball price and would have been happy to just get that ask, but instead we got multiple offers above list with escalator clauses. The winner was 8.5% above list price, all cash, paying all costs except survey.

Iíd want no part of this market as a buyer and would be socking away cash to buy in a year or two if at all possible. This isnít a sustainable housing market and I feel very fortunate to be on the seller side right now.

Dicey

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Re: Not accepting offers at asking price should be illegal
« Reply #95 on: May 24, 2021, 09:19:02 AM »
Yesterday, I got a ping from Redfin on a new listing. It caught my eye because it was listed for $3.2M, which is on the high side for my area. By the time I clicked it open, it was already pending. Two hours!!

BTW, the estimated PITI is $15k per month! Hard to imagine having the income to support that kind of payment. And that doesn't include utilities or maintenance. Eeks!

JetBlast

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Re: Not accepting offers at asking price should be illegal
« Reply #96 on: May 24, 2021, 09:32:33 AM »
Yesterday, I got a ping from Redfin on a new listing. It caught my eye because it was listed for $3.2M, which is on the high side for my area. By the time I clicked it open, it was already pending. Two hours!!

BTW, the estimated PITI is $15k per month! Hard to imagine having the income to support that kind of payment. And that doesn't include utilities or maintenance. Eeks!

Thatís just nuts.

Iíd imagine most donít have the income to support it without rolling big money in from selling a previous home. I know thatís what my cousin and his wife did in the Bay Area this year. Made over a million selling near Corte Madera and put it into a fancier place in Tiburon.

Dicey

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Re: Not accepting offers at asking price should be illegal
« Reply #97 on: May 25, 2021, 06:59:57 AM »
Yesterday, I got a ping from Redfin on a new listing. It caught my eye because it was listed for $3.2M, which is on the high side for my area. By the time I clicked it open, it was already pending. Two hours!!

BTW, the estimated PITI is $15k per month! Hard to imagine having the income to support that kind of payment. And that doesn't include utilities or maintenance. Eeks!

Thatís just nuts.

Iíd imagine most donít have the income to support it without rolling big money in from selling a previous home. I know thatís what my cousin and his wife did in the Bay Area this year. Made over a million selling near Corte Madera and put it into a fancier place in Tiburon.
$3.2M is much more of a Marin County or Silly Valley price than in my little corner of the East Bay.

I showed the listing to my walking partner and we discussed the possibilities. One plausible idea is that the seller had an interested party who was hesitating on the price. Seller put it on the open market, forcing the buyer to pony up.

My brother's just closing on a house in N. Phoenix. A common problem there is properties are selling for way over the appraised price. In addition to waiving inspections, buyers who aren't all cash are promising to cough up the difference, which stinks if you like big, long mortgages. My brother's one of those people. To get the house, he put 20% down plus the $100k difference between the winning bid and the appraisal. He's buying now so he can RE. They want a one story house in retirement and he wants to get a mortgage while he still has a regular paycheck. Happily, he's been through downward cycles before and can afford to ride it out if the market implodes.

Villanelle

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Re: Not accepting offers at asking price should be illegal
« Reply #98 on: May 26, 2021, 12:13:38 PM »
I agree with a lot of posters that FOMO is driving up prices. There is a fear that inflation is rising and this will continue. If you don't buy now, you will be paying even more in 3 months.

The housing shortage is a bit surprising to me... where did these people come from? When you ask, people say California, but then why is there a shortage of homes in California too! Everyone who buys a house was living somewhere else before. There are more homes (139.64 million in 2019) than households (128.58 million in 2019) in the US so not much of a shortage, but possibly the percentage of vacant homes is higher. I know that there is some temporary situations of people occupying 2 homes right now. My sister bought a home last summer and renovated it while she lived in her rental. Our neighbor bought a house a month ago and the rental that they were living in needs some updates so is vacant now. My grandma owns two homes, but won't sell until she dies to avoid the capital gains (when you die, the home steps up to current values). The home is vacant.

I also think there is a rise in single adult households and singles buying homes. Maybe this increased the number of households, since it can't be attributed to immigration or a lowered death rate (US death rate increased 16% in 2020). Statistics show that many homeowners are the older generations.

I also read about the 18 year housing cycle... this theory that housing prices peak every 18 years on average... according to the article we will reach the peak in 2024... sounds about right! Although I wonder how the pandemic sped up or held back this cycle.

Unfortunately I can't wait for this housing market to crash because I have a family and time is money... can't spend 3 years without stability for our kids. We will keep trying to buy in this boom and just live there forever!!

Many people own more than one home.  Some even more than two.  If "homes" is just any apartment, condo, SFH, or other living structure, then subtract every lake, beach, or ski house that is used only for vacationing and every airbnb for starters, along with every snowbird summer or winter home.  And yes, also renovations, homes that are just mid-transaction (seller moved out and buyer hasn't yet moved in), and other similar situations.  All those equal a non-insignificant decrease in that comparison of home vs. households, and that's before vacancies from speculators. 

It's one of many reasons that so many people have Airbnb and similar situations--that takes homes that typically would be homes (as opposed to more traditional vacations homes) and removes them from the housing market. 


Villanelle

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Re: Not accepting offers at asking price should be illegal
« Reply #99 on: May 26, 2021, 12:14:23 PM »
I agree with a lot of posters that FOMO is driving up prices. There is a fear that inflation is rising and this will continue. If you don't buy now, you will be paying even more in 3 months.

The housing shortage is a bit surprising to me... where did these people come from? When you ask, people say California, but then why is there a shortage of homes in California too! Everyone who buys a house was living somewhere else before. There are more homes (139.64 million in 2019) than households (128.58 million in 2019) in the US so not much of a shortage, but possibly the percentage of vacant homes is higher. I know that there is some temporary situations of people occupying 2 homes right now. My sister bought a home last summer and renovated it while she lived in her rental. Our neighbor bought a house a month ago and the rental that they were living in needs some updates so is vacant now. My grandma owns two homes, but won't sell until she dies to avoid the capital gains (when you die, the home steps up to current values). The home is vacant.

I also think there is a rise in single adult households and singles buying homes. Maybe this increased the number of households, since it can't be attributed to immigration or a lowered death rate (US death rate increased 16% in 2020). Statistics show that many homeowners are the older generations.

I also read about the 18 year housing cycle... this theory that housing prices peak every 18 years on average... according to the article we will reach the peak in 2024... sounds about right! Although I wonder how the pandemic sped up or held back this cycle.

Unfortunately I can't wait for this housing market to crash because I have a family and time is money... can't spend 3 years without stability for our kids. We will keep trying to buy in this boom and just live there forever!!

Many people own more than one home.  Some even more than two.  If "homes" is just any apartment, condo, SFH, or other living structure, then subtract every lake, beach, or ski house that is used only for vacationing and every airbnb for starters, along with every snowbird summer or winter home.  And yes, also renovations, homes that are just mid-transaction (seller moved out and buyer hasn't yet moved in), and other similar situations.  All those equal a non-insignificant decrease in that comparison of home vs. households, and that's before vacancies from speculators. 

It's one of many reasons that so many people have Airbnb and similar situations--that takes homes that typically would be homes (as opposed to more traditional vacations homes) and removes them from the housing market.