Author Topic: What explains this COVID housing bubble?  (Read 8913 times)

Captain Cactus

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What explains this COVID housing bubble?
« on: July 28, 2020, 03:10:43 PM »
I've noticed a lot more "pending" flags on new real estate listings, sometimes within a day or two of hitting the MLS.  Specifically I'm looking at the coast of Maine and in the White Mountains of NH. 

Anecdotally I suspect city dwellers are buying country homes now that they're working from home, don't want to be cooped up in little city apartment with no yard, etc... but long term does this make sense?  Will WFH remain permanent for these buyers?

Is this a bubble?  Will things go back to normal (ie how they were prior to covid) eventually?  Or will we forever be competing against city dwellers wanting to WFH in scenic locations (vs just retired people). 

Basically I'm salty, not because I am going to buy one of these properties right away, but because I've been lusting after properties in these areas for years and now all of a sudden people are snatching these up and I'm jealous.  LOL. 

Dicey

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Re: What explains this COVID housing bubble?
« Reply #1 on: July 28, 2020, 03:37:35 PM »
It's probably a combination of things. Incredibly low interest rates are a driver, for sure.

People are figuring out that if they're going to WFH they need more space, so they're supposedly exiting the city cores in droves and pushing outward. Folks are ghosting their leases in SF, just to get out.

Many people are suffering through this pandemic, but many more are not. Their jobs are secure, they just want/need more elbow room. Or they want the security of ownership in a way they didn't before.

That said, we've been watching the Recent Solds in the two areas we buy in. Prices are insane! We're going to sit on the sidelines and watch for a while. It just doesn't seem sustainable.

I'm sure there are other reasons, but this is a start.

HPstache

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Re: What explains this COVID housing bubble?
« Reply #2 on: July 28, 2020, 03:56:26 PM »
Another possibility:  A family of 5 (for example) received $3,900 in stimulus as well.  If job loss is not a concern for that family, that's a big chunk towards a down payment they did not have pre-COVID.  Combine that with increased buying power due to low interest rates and it becomes even easier to snap up that home that just came on the market.

SwordGuy

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Re: What explains this COVID housing bubble?
« Reply #3 on: July 28, 2020, 05:00:55 PM »
My realtor says the supply of available houses for sale is lower, so there are fewer to choose from.

Papa bear

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Re: What explains this COVID housing bubble?
« Reply #4 on: July 28, 2020, 05:09:17 PM »
Not only are sale prices still climbing, days on market are low, and rents are stronger than ever. 

This is true in the multiple markets I invest in. I’m thinking bubble, but I have no idea when it will pop. And I would consider selling my investments if I could possibly buy other properties, but everything is stupid expensive.


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BDWW

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Re: What explains this COVID housing bubble?
« Reply #5 on: July 28, 2020, 05:19:30 PM »
It's people running from the cities and moving to less populated places. It's a huge thing here.

Spoken to a couple realtor friends, and (out-of-state) people are regularly putting in offers sight-unseen. The housing market around here has jumped ~20% and surrounding areas since the pandemic began. My hometown is ~1200 people (30 miles from the nearest "city" pop-30k), and the average selling price pre-covid was ~150K, now it's approaching 250K and inventory is extremely low.

bacchi

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Re: What explains this COVID housing bubble?
« Reply #6 on: July 28, 2020, 07:17:06 PM »
Wait, if people are leaving the city core, then who's buying all the houses in my (city core) neighborhood?

I think part of it is that the sales cycle was compressed. The usual spring bump didn't occur because of covid and the March market collapse and now some people* are feeling more comfortable.

We may well see a covid hangover soon if/when unemployment benefits and PPP loans run out.



* There may be a somewhat short-lived bifurcation in the employment market. That is, there's now an employment gap between those who can still work (WFH, construction,) and those who can't (restaurant owners, non-essential medical providers, service industry,).

MissPeach

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Re: What explains this COVID housing bubble?
« Reply #7 on: July 29, 2020, 11:32:33 AM »
I'm in a city, am only looking at urban properties, and am seeing things sell quickly too. I don't see a lot of listings for sale but i am seeing a lot of vacant rentals.

I keep reading about how many mortgage payments the average people are behind (it's something like 20-30%) and my area has a 20% unemployment rate right now so I imagine it will catch up at some point once all the covid help programs end.

chemistk

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Re: What explains this COVID housing bubble?
« Reply #8 on: July 29, 2020, 01:42:35 PM »
Around where I live, a FB group has popped up for people to 'pre-sell' their homes - there are so many people looking to move here that prospective buyers are asking anyone they know if they even hear of a house going on the market that fits their needs. They join the FB group and are PM'd every time something comes along. Many of the better houses here are on the market for less than 36 hours before they're pending.

It stinks, because we really want to GTFO of our rental at this point but most, if not all, of the houses locally are going for above list price and likely with stronger cash offers than we could provide. I'm hoping for the bubble to pop soon.

Captain Cactus

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Re: What explains this COVID housing bubble?
« Reply #9 on: July 29, 2020, 01:55:12 PM »
The exodus from the city to the countryside is what fascinates me the most...

For those of you know the know, or have friends in real estate, are these 2nd (aka vacation) homes?  For example, people want a Plan B for when the SHTF scenarios?  Or are people truly pivoting from the city to the country? 

If people buy a house in the country but continue to WFH at their corporate job, they must be pretty confident that this arrangement will remain permanent...Otherwise it doesn't make sense to purchase a house for an uncertain amount of time.

Once all the special covid programs run out, do we expect to see 1) a slow down of people buying up of country homes and 2) a bunch of foreclosures?  If so, will it be like during the GFC?

The interest rates haven't really come down thaaaat much over the past few years.  Our mortgage on a 30 year loan back in 2017 was 3.785%. 


Captain Cactus

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Re: What explains this COVID housing bubble?
« Reply #10 on: July 29, 2020, 02:00:00 PM »
Around where I live, a FB group has popped up for people to 'pre-sell' their homes - there are so many people looking to move here that prospective buyers are asking anyone they know if they even hear of a house going on the market that fits their needs. They join the FB group and are PM'd every time something comes along. Many of the better houses here are on the market for less than 36 hours before they're pending.

It stinks, because we really want to GTFO of our rental at this point but most, if not all, of the houses locally are going for above list price and likely with stronger cash offers than we could provide. I'm hoping for the bubble to pop soon.

Amen, I'm hoping for a bubble burst as well!

I'm particularly interested in a resort town in the White Mountains and these rich city folk are buying up these condos that have lingered on the market for months.  In my mind I envision these rich, corporate fat cats who wear dress shirts with bankers collars and french cuffs, calling up the local agent and buying these places sight unseen...dropping a fat bag of money to pay for it.  Basically I'm jealous. 

Imma

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Re: What explains this COVID housing bubble?
« Reply #11 on: July 29, 2020, 02:33:55 PM »
I've heard from more than 1 friend they're trying to buy while they still have work. In my country it's hard to qualify for a mortgage if you have a fixed term job contract rather than a permanent contract. 1/3 of the workforce is on a fixed term job contract and employers will usually offer several fixed term contracts before they offer a permanent contract. So if your permanent job disappears it may mean you won't qualify for a mortgage for the next 3-5 years. On top of that, those who are still employed have a lot less options for spending so they are saving more money than ever before.

Even though I sort of understand their reasoning I wouldn't dare to take the risk of buying a house now if I had any uncertainty about my job - unless of course I would be able to buy a very, very affordable house but in a country where the average house costs 8 times the average family income, good luck with that.

Personally, we bought our current place during the last downturn and I'm thinking of saving up some cash just in case we could buy our dream home if/when the housing market finally crashes. My job is extremely steady.

Peachtea

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Re: What explains this COVID housing bubble?
« Reply #12 on: July 29, 2020, 05:41:41 PM »
The exodus from the city to the countryside is what fascinates me the most...

For those of you know the know, or have friends in real estate, are these 2nd (aka vacation) homes?  For example, people want a Plan B for when the SHTF scenarios?  Or are people truly pivoting from the city to the country? 

If people buy a house in the country but continue to WFH at their corporate job, they must be pretty confident that this arrangement will remain permanent...Otherwise it doesn't make sense to purchase a house for an uncertain amount of time.

Once all the special covid programs run out, do we expect to see 1) a slow down of people buying up of country homes and 2) a bunch of foreclosures?  If so, will it be like during the GFC?

The interest rates haven't really come down thaaaat much over the past few years.  Our mortgage on a 30 year loan back in 2017 was 3.785%.

I’m a government attorney our output is quantitatively measured for performance ratings and just overall. Of course mgmt  has been crunching numbers extra hard since we went to 100% telework in March. They went from being concerned and warning people that this was not a vacation to being shocked at how much our stats have improved. Friend in another gov agency said their mgmt was enthusiastically discussing going to a micro office situation next FY to save on rent (but their HQ bureaucracy later shut the idea down). So I think there are many professionals whose employers resisted full remote work, but, after being forced to test it, changed their tune. It wouldn’t surprise me if a bunch of people are now getting the green light for permanent remote work and, now having remote work, are choosing to move somewhere more relaxing or LCOL.

Captain Cactus

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Re: What explains this COVID housing bubble?
« Reply #13 on: July 31, 2020, 09:11:59 AM »
Do you think the prices in markets people are flocking to will be permanently increased?  Or is this a bubble that will settle down over time?

Just Joe

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Re: What explains this COVID housing bubble?
« Reply #14 on: July 31, 2020, 09:37:34 AM »
We sold a house this week. Three offers in 24 hours. Final offer was $5K more than our advertised price. About $45K higher than we thought the house was worth about 6 months ago.

Understand that this is a smallish town in flyover country. Bidding wars are rare. Low inventory is rare. I see it as a bubble in my amateur opinion.

Real estate agent confirmed what has been mentioned already: low interest rates, low inventory, people leaving big cities looking for somewhere quieter.

Buyers offered cash. No inspection. No requests. Leaving the suburbs of the nearest big city an hour or more away to be closer to family here. Boomer generation. Downsizing in sq footage and price.

I think there is a bubble here and by winter things will settle down. If the gov assistance ends and the economy doesn't recover, real estate might hit a hard stop making it a buyer's market instead of a seller's market.

Captain Cactus

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Re: What explains this COVID housing bubble?
« Reply #15 on: July 31, 2020, 01:40:40 PM »
We sold a house this week. Three offers in 24 hours. Final offer was $5K more than our advertised price. About $45K higher than we thought the house was worth about 6 months ago.

Understand that this is a smallish town in flyover country. Bidding wars are rare. Low inventory is rare. I see it as a bubble in my amateur opinion.

Real estate agent confirmed what has been mentioned already: low interest rates, low inventory, people leaving big cities looking for somewhere quieter.

Buyers offered cash. No inspection. No requests. Leaving the suburbs of the nearest big city an hour or more away to be closer to family here. Boomer generation. Downsizing in sq footage and price.

I think there is a bubble here and by winter things will settle down. If the gov assistance ends and the economy doesn't recover, real estate might hit a hard stop making it a buyer's market instead of a seller's market.

Interesting.  I guess that's good or bad, depending on where you stand.


slappy

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Re: What explains this COVID housing bubble?
« Reply #16 on: July 31, 2020, 01:43:37 PM »
We sold a house this week. Three offers in 24 hours. Final offer was $5K more than our advertised price. About $45K higher than we thought the house was worth about 6 months ago.

Understand that this is a smallish town in flyover country. Bidding wars are rare. Low inventory is rare. I see it as a bubble in my amateur opinion.

Real estate agent confirmed what has been mentioned already: low interest rates, low inventory, people leaving big cities looking for somewhere quieter.

Buyers offered cash. No inspection. No requests. Leaving the suburbs of the nearest big city an hour or more away to be closer to family here. Boomer generation. Downsizing in sq footage and price.

I think there is a bubble here and by winter things will settle down. If the gov assistance ends and the economy doesn't recover, real estate might hit a hard stop making it a buyer's market instead of a seller's market.

Interesting.  I guess that's good or bad, depending on where you stand.

I'm in Southern NH and prices have been crazy for the past couple of years. It seems like they may be starting to cool a bit, but I can't really tell. Maybe further north it's a new thing, but in my area, it's been like this for awhile. I think some people are also trying to sell now while the market is hot. I know a couple people who did that a couple of years ago. Wanted to sell while the market was hot, so they sold and are now renting while they decide where they want to retire. Of course the market still seems to be hot, so who knows if they won that game.

Captain Cactus

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Re: What explains this COVID housing bubble?
« Reply #17 on: July 31, 2020, 05:54:05 PM »
We sold a house this week. Three offers in 24 hours. Final offer was $5K more than our advertised price. About $45K higher than we thought the house was worth about 6 months ago.

Understand that this is a smallish town in flyover country. Bidding wars are rare. Low inventory is rare. I see it as a bubble in my amateur opinion.

Real estate agent confirmed what has been mentioned already: low interest rates, low inventory, people leaving big cities looking for somewhere quieter.

Buyers offered cash. No inspection. No requests. Leaving the suburbs of the nearest big city an hour or more away to be closer to family here. Boomer generation. Downsizing in sq footage and price.

I think there is a bubble here and by winter things will settle down. If the gov assistance ends and the economy doesn't recover, real estate might hit a hard stop making it a buyer's market instead of a seller's market.

Interesting.  I guess that's good or bad, depending on where you stand.

I'm in Southern NH and prices have been crazy for the past couple of years. It seems like they may be starting to cool a bit, but I can't really tell. Maybe further north it's a new thing, but in my area, it's been like this for awhile. I think some people are also trying to sell now while the market is hot. I know a couple people who did that a couple of years ago. Wanted to sell while the market was hot, so they sold and are now renting while they decide where they want to retire. Of course the market still seems to be hot, so who knows if they won that game.

Yes, New Hampshire!  One of the places I’m watching closely.  My grandmother was in Exeter, her house sold quick.  Lots of money going into that town.  I am watching the White Mountains, Waterville Valley in particular. 

brooklynmoney

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Re: What explains this COVID housing bubble?
« Reply #18 on: July 31, 2020, 08:15:00 PM »
People here in NYC are buying second homes in places like Hudson Valley or anywhere with space and grass or moving to the suburbs which is what I’m doing. I’m still keeping my apartment in case I want to come back someday but am renting it out. I will figure out where to buy over the next year maybe the beach. My downstairs neighbor bought a house in Rhode Island but is keeping his apt and renting it for the year so if they want to come back they will keep the Rhode Island house as a 2nd home. My other friend is going to buy a CT house sight unseen haha. No need for mortgage everyone is just getting HELOCs. Cheap $.

Captain Cactus

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Re: What explains this COVID housing bubble?
« Reply #19 on: August 01, 2020, 11:46:49 AM »
People here in NYC are buying second homes in places like Hudson Valley or anywhere with space and grass or moving to the suburbs which is what I’m doing. I’m still keeping my apartment in case I want to come back someday but am renting it out. I will figure out where to buy over the next year maybe the beach. My downstairs neighbor bought a house in Rhode Island but is keeping his apt and renting it for the year so if they want to come back they will keep the Rhode Island house as a 2nd home. My other friend is going to buy a CT house sight unseen haha. No need for mortgage everyone is just getting HELOCs. Cheap $.

I recognize that it’s sour grapes or jealousy or whatnot, but that kind of approach really burns my bass.  It’s like “I shall now buy a 2nd house with cash...what house pleases me today...I think I shall choose this one.”

Basically I’m pissed that my wife won’t go for it because we live in the same town as her parents and she isn’t open to moving.

JLee

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Re: What explains this COVID housing bubble?
« Reply #20 on: August 01, 2020, 12:21:53 PM »
The exodus from the city to the countryside is what fascinates me the most...

For those of you know the know, or have friends in real estate, are these 2nd (aka vacation) homes?  For example, people want a Plan B for when the SHTF scenarios?  Or are people truly pivoting from the city to the country? 

If people buy a house in the country but continue to WFH at their corporate job, they must be pretty confident that this arrangement will remain permanent...Otherwise it doesn't make sense to purchase a house for an uncertain amount of time.

Once all the special covid programs run out, do we expect to see 1) a slow down of people buying up of country homes and 2) a bunch of foreclosures?  If so, will it be like during the GFC?

The interest rates haven't really come down thaaaat much over the past few years.  Our mortgage on a 30 year loan back in 2017 was 3.785%.

I was quoted 2.5% for 30yr last week -- mortgage rates are crazy now.

FINate

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Re: What explains this COVID housing bubble?
« Reply #21 on: August 01, 2020, 12:49:21 PM »
Low mortgage rates are almost certainly propping up the RE market. Yet markets are uneven and have unfolded in a way I didn't really anticipate, though in hindsight it makes sense. Multi-family/small apartments in San Francisco proper and other downtowns? These seem to have cooled off, along with rents. Whereas across the bay in Alameda (mostly SFH on slightly larger lots) the market is hotter than ever. Places further out are also hot, such as Napa and other rural areas outside the Bay Area.

Interested to hear from folks near other large dense cities what their local RE market is doing.

I'll add my amateur armchair speculation to the mix: Some of the demand from city --> rural is from the ultra wealthy desperate to escape the shelter-in-place city life. This makes for sensational headlines, so of course media loves to report on it. But I'm thinking this isn't a huge (relatively speaking) number of people. It's pretty widely accepted that young adults like the city life, especially when dating and finding a SO, but things change once kids start to enter the picture. So at any given time there's a large-ish percentage of urbanites there for a period of time (college, building a career, padding resume, meeting SO, enjoying a fast paced social life, etc.) but plan on heading to the burbs or the country or a smaller city at some point in the next several years. Seems likely that, with most of the interesting stuff cities have on offer shut down and remote work now a possibility for the next 1 year or more, a lot of this demand for other places has been pulled forward. Why not make the move a year or two earlier than planned and exploit the wage arbitrage, while also having more room to roam while social distancing?

If this is accurate then, barring some other major disruption, I wouldn't expect a crash in RE prices in the burbs/rural/small cities in the short term. These are folks planning to stay put for the long haul. Though I would expect a leveling off of prices as the demand pulled forward should mean less than usual demand in the near future.

brooklynmoney

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Re: What explains this COVID housing bubble?
« Reply #22 on: August 01, 2020, 02:58:10 PM »
People here in NYC are buying second homes in places like Hudson Valley or anywhere with space and grass or moving to the suburbs which is what I’m doing. I’m still keeping my apartment in case I want to come back someday but am renting it out. I will figure out where to buy over the next year maybe the beach. My downstairs neighbor bought a house in Rhode Island but is keeping his apt and renting it for the year so if they want to come back they will keep the Rhode Island house as a 2nd home. My other friend is going to buy a CT house sight unseen haha. No need for mortgage everyone is just getting HELOCs. Cheap $.

I recognize that it’s sour grapes or jealousy or whatnot, but that kind of approach really burns my bass.  It’s like “I shall now buy a 2nd house with cash...what house pleases me today...I think I shall choose this one.”

Basically I’m pissed that my wife won’t go for it because we live in the same town as her parents and she isn’t open to moving.

I hear you. Honestly a lot of us were really shaken by the constant wail of ambulances and learning of people we know dying so there might be a little you only live once why not attitude happening. I personally am not buying a second home just renting an apt in NJ suburbs (not quite as glam).


Sibley

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Re: What explains this COVID housing bubble?
« Reply #23 on: August 01, 2020, 07:44:06 PM »
According to my realtor friend:

1. Illinois flight to northwest Indiana
2. Compressed season - there was very little activity in Q2 due to the shut down, so it just made Q3 even more insane.
3. Low rates
4. Generally low inventory, so houses that are on the market tend to go very quick.

I'm hoping things chill a bit. My parents are going to selling their house and moving close to me, and it's not like they have a lot of money.

Captain Cactus

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Re: What explains this COVID housing bubble?
« Reply #24 on: August 03, 2020, 09:50:10 AM »
According to my realtor friend:

1. Illinois flight to northwest Indiana
2. Compressed season - there was very little activity in Q2 due to the shut down, so it just made Q3 even more insane.
3. Low rates
4. Generally low inventory, so houses that are on the market tend to go very quick.

I'm hoping things chill a bit. My parents are going to selling their house and moving close to me, and it's not like they have a lot of money.

I also hope things chill out.  I just can't imagine moving in this climate, but people certainly have their reasons, motivated by desire or circumstance. 

I wonder how companies in general will continue the work from home option long term.  Right now it makes a lot of sense because of covid.  When will companies simply make WFH the way they conduct business though?  When will we start to see job postings with the location being "WFH" instead of "Boston" or "New York"?  And when that does becomes the norm, how long will it take for people to start fleeing to wherever they've always wanted to live, and would have gone earlier but for the job/requirement to go into an office each day so some middle manager can ensure the company is getting their money's worth?   

If WFH becomes an established way of doing business there's going to be a lot of middle managers wandering around empty corporate buildings looking for someone to "coach"...

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Re: What explains this COVID housing bubble?
« Reply #25 on: August 03, 2020, 10:03:19 AM »

I'll add my amateur armchair speculation to the mix: Some of the demand from city --> rural is from the ultra wealthy desperate to escape the shelter-in-place city life. This makes for sensational headlines, so of course media loves to report on it. But I'm thinking this isn't a huge (relatively speaking) number of people. It's pretty widely accepted that young adults like the city life, especially when dating and finding a SO, but things change once kids start to enter the picture. So at any given time there's a large-ish percentage of urbanites there for a period of time (college, building a career, padding resume, meeting SO, enjoying a fast paced social life, etc.) but plan on heading to the burbs or the country or a smaller city at some point in the next several years. Seems likely that, with most of the interesting stuff cities have on offer shut down and remote work now a possibility for the next 1 year or more, a lot of this demand for other places has been pulled forward. Why not make the move a year or two earlier than planned and exploit the wage arbitrage, while also having more room to roam while social distancing?

Bingo -- this is exactly what my spouse and I are doing. We'd planned to move out of the Bay Area back to the area where our families are in 2022, and our timeline has moved up to moving this year or next.

That said, I don't get the sense that many of my coworkers are doing the same, whether young and unattached or older and more settled with kids. They mostly seem to want to stay in the Bay long-term. Which is sensible if you're not planning on RE... it is the place for most tech stuff in the US.

FINate

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Re: What explains this COVID housing bubble?
« Reply #26 on: August 19, 2020, 09:28:28 AM »

I'll add my amateur armchair speculation to the mix: Some of the demand from city --> rural is from the ultra wealthy desperate to escape the shelter-in-place city life. This makes for sensational headlines, so of course media loves to report on it. But I'm thinking this isn't a huge (relatively speaking) number of people. It's pretty widely accepted that young adults like the city life, especially when dating and finding a SO, but things change once kids start to enter the picture. So at any given time there's a large-ish percentage of urbanites there for a period of time (college, building a career, padding resume, meeting SO, enjoying a fast paced social life, etc.) but plan on heading to the burbs or the country or a smaller city at some point in the next several years. Seems likely that, with most of the interesting stuff cities have on offer shut down and remote work now a possibility for the next 1 year or more, a lot of this demand for other places has been pulled forward. Why not make the move a year or two earlier than planned and exploit the wage arbitrage, while also having more room to roam while social distancing?

Bingo -- this is exactly what my spouse and I are doing. We'd planned to move out of the Bay Area back to the area where our families are in 2022, and our timeline has moved up to moving this year or next.

That said, I don't get the sense that many of my coworkers are doing the same, whether young and unattached or older and more settled with kids. They mostly seem to want to stay in the Bay long-term. Which is sensible if you're not planning on RE... it is the place for most tech stuff in the US.

Agreed, I think the majority are planning on staying put long term. Though this is different than an increasing trend of more people leaving than moving in.

If/when you make known your intentions known you may be surprised by the number of people who quietly reveal that they are also looking to leave. I heard from two more acquaintances planning exits this last week. This has becoming something of a trend... a private message notification from someone I haven't talk with in a while: "We want out! Can we ask about your move?" Yes, this is anecdotal, but it's in line with the observed stats.

And yet another reason for people to move their moving plans closer: distance learning. Seems many have been waiting for their kids to finish high school before relocating because of sports, friends, graduation, and so on. But with the next academic shot, why not move now?

rocketpj

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Re: What explains this COVID housing bubble?
« Reply #27 on: August 19, 2020, 10:38:57 AM »
I live in an 'exurb' that is a ferry ride away from the major city.  Real Estate here has been jumping, with bidding wars etc on new listings.

There have always been some people who commuted to the city - which meant at least an hour or two each direction.  That was a driver for our local market forever (it was originally why we moved her, though now I work locally and DW is basically permanent WFH).  Now we are seeing many, many people realize that they can sell their little boxes in the HCOL city and WFH in our very nearby little community in a much nicer home on or near a beach, with cash leftover.

It's a local effect, no idea if the bubble will pop.  I'm pretty heavy in RE locally, so of course I'd prefer it not to pop, but no matter as I'm long term anyway.  I prefer commercial RE for investment anyway, and more people moving here will only help support that market (without driving prices up for the most part).


ketchup

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Re: What explains this COVID housing bubble?
« Reply #28 on: August 19, 2020, 11:12:03 AM »
I own an empty house in the suburbs and the neighborhood seems to have jumped about 25% compared to last year.  I'll probably be cashing out shortly.  I don't fully understand but I'll take the cash.

anni

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Re: What explains this COVID housing bubble?
« Reply #29 on: August 19, 2020, 11:29:23 AM »
Just coming from my personal perspective - even though I don't really have a good idea of where I want to settle down or why, or have a ton of capital saved up for a house purchase, I haven't been able to resist browsing houses online for the past several months. I've even talked to some realtors and got pre-approved for a mortgage out of pure curiosity... I know that renting makes sense, financially, for me, but the emotional draw of homeownership right now is very strong. I have been loving staying home and hope it continues for the majority of my professional life. I can't stop daydreaming about a country house that I can work on when I'm not "at" my day job. One realtor I talked to in rural Virginia said the market is hotter now than he's seen in the last 40 years. He said there have been tons of NYC and California people looking for second homes or retirement properties right now, trying to get out of the city.

jeromedawg

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Re: What explains this COVID housing bubble?
« Reply #30 on: August 19, 2020, 02:48:48 PM »
We're currently on market - it hasn't even been a week and we're at around 9 offers with one that dropped out of the races. There are some that are under asking and some at asking but we have strong competition above asking too. My agent intentionally listed under market to try to get eyes on it - Saturday and Sunday were non-stop showings. I'm so glad we decided to move out before doing that...

I think it's a combination of low interest rates but also the whole WFH thing - ppl are justifying the rush to buy and often increases in price via bidding wars because they are anticipating not only WFH but also distance learning or homeschooling. It's pretty nuts right now.

Abe

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Re: What explains this COVID housing bubble?
« Reply #31 on: August 19, 2020, 11:41:25 PM »
Panic buying from rich city people over covid and protests.

economista

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Re: What explains this COVID housing bubble?
« Reply #32 on: August 20, 2020, 07:34:00 AM »
In our case we live in an expensive location thousands of miles from any family. Our plan has been to move back to the extremely LCOL area our family lives in around 2025 after I receive PSLF. At that point I could offer up a full time WFH plan to my bosses and if they said no I could simply walk away from the job. Now our plan has been moved up. I am currently WFH and there has been a lot of talk about making my team permanent 100% WFH. If that happens we will move immediately. Not only would we have family around to help with our kids and just for support in general, but our tiny townhouse here was just appraised at $450k. We can buy a single family house with twice the sq ft for $150k there. It makes total sense for us to move as soon as we know for sure that my job is permanently WFH.

Abe

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Re: What explains this COVID housing bubble?
« Reply #33 on: August 20, 2020, 03:13:58 PM »
I'd wait a year or so to make sure the "permanent" 100% work from home thing sticks. There's a lot of that being thrown around right now, but a year from now things can be very different. Unless it is in a new, signed employment contract I'd take it with a grain of salt. Then again, my job by definition can't be work from home, so what do I know.

jeromedawg

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Re: What explains this COVID housing bubble?
« Reply #34 on: August 20, 2020, 04:35:07 PM »
I'd wait a year or so to make sure the "permanent" 100% work from home thing sticks. There's a lot of that being thrown around right now, but a year from now things can be very different. Unless it is in a new, signed employment contract I'd take it with a grain of salt. Then again, my job by definition can't be work from home, so what do I know.
In our case we live in an expensive location thousands of miles from any family. Our plan has been to move back to the extremely LCOL area our family lives in around 2025 after I receive PSLF. At that point I could offer up a full time WFH plan to my bosses and if they said no I could simply walk away from the job. Now our plan has been moved up. I am currently WFH and there has been a lot of talk about making my team permanent 100% WFH. If that happens we will move immediately. Not only would we have family around to help with our kids and just for support in general, but our tiny townhouse here was just appraised at $450k. We can buy a single family house with twice the sq ft for $150k there. It makes total sense for us to move as soon as we know for sure that my job is permanently WFH.

Agreed. Most things are rarely ever permanent. The place I work is "known" for the WFH culture and several months before COVID hit, the newly minted CTO was pushing for "transformation at the organizational level" which we all know what that means: forcing re-org and co-location. Well, the co-location thing has been put on hold indefinitely (at least as long as COVID is here, which could be for a really long time) but the re-orgs have started happening at different levels. Lay-offs not quite yet but I'm anticipating *something* and it's quite uncomfortable. Anyway, my point is that I wouldn't put all my money on any company saying they're going to a 100% WFH model in hopes that it would be permanent and forever. Eventually, *someone* will come along at any given company and be in a place of control where they have some grandiose ideas about why WFH is bad enough to justify ending it (or vice versa). 

Chris Pascale

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Re: What explains this COVID housing bubble?
« Reply #35 on: August 20, 2020, 10:20:06 PM »
Wait, if people are leaving the city core, then who's buying all the houses in my (city core) neighborhood?

I was wondering this, and asking myself if maybe there were deals to be had in the city.

Abe

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Re: What explains this COVID housing bubble?
« Reply #36 on: August 20, 2020, 10:23:20 PM »
Wait, if people are leaving the city core, then who's buying all the houses in my (city core) neighborhood?

I was wondering this, and asking myself if maybe there were deals to be had in the city.

REITs are buying so they can rent to people when the economy recovers and people move back into the cities again. People over-estimate our collective memory. Remember H1N1?

ebella

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Re: What explains this COVID housing bubble?
« Reply #37 on: August 26, 2020, 07:41:54 AM »
In our case we live in an expensive location thousands of miles from any family. Our plan has been to move back to the extremely LCOL area our family lives in around 2025 after I receive PSLF. At that point I could offer up a full time WFH plan to my bosses and if they said no I could simply walk away from the job. Now our plan has been moved up. I am currently WFH and there has been a lot of talk about making my team permanent 100% WFH. If that happens we will move immediately. Not only would we have family around to help with our kids and just for support in general, but our tiny townhouse here was just appraised at $450k. We can buy a single family house with twice the sq ft for $150k there. It makes total sense for us to move as soon as we know for sure that my job is permanently WFH.

Same boat minus kids.  We bought a loft (1 bed/1 bath) so we could avoid commute to work.  SO has since been reassigned to a location that is not within bike or transit commute distance from our home and I am now WFH.  We never really wanted the loft life but also hated commuting.  Now all the reasons for being in city center in a loft are gone and we just want to have some outdoor space and separate living/sleeping/working spaces.  Asshole neighbors who don't wear masks in common areas also doesn't help.   I'm just worried we won't be able to sell the loft if we wait to list it till after we find some other place to live.

Sid Hoffman

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Re: What explains this COVID housing bubble?
« Reply #38 on: August 26, 2020, 07:03:45 PM »
Agreed. Most things are rarely ever permanent. The place I work is "known" for the WFH culture and several months before COVID hit, the newly minted CTO was pushing for "transformation at the organizational level" which we all know what that means: forcing re-org and co-location. Well, the co-location thing has been put on hold indefinitely (at least as long as COVID is here, which could be for a really long time) but the re-orgs have started happening at different levels. Lay-offs not quite yet but I'm anticipating *something* and it's quite uncomfortable. Anyway, my point is that I wouldn't put all my money on any company saying they're going to a 100% WFH model in hopes that it would be permanent and forever. Eventually, *someone* will come along at any given company and be in a place of control where they have some grandiose ideas about why WFH is bad enough to justify ending it (or vice versa).

That's a similar story to what I've seen where I work, except they are pushing hard to get everyone back in the office for multiple reasons. The implication is even that they want maximum work from traditional offices because COVID could be driving commercial real estate prices to record lows this year and next. While single family homes skyrocket in price, commercial office buildings are becoming fire sales. I'm expecting a new cubicle next year, or possibly even having one assigned for part time use this year. If commercial real estate prices crash hard enough, I think my company may go for 100% in-office work for the first time since I've worked here.

Relevant to this topic however - housing and work are closely related. I don't doubt that my company isn't the only one eyeing crashing office space prices. I still remember in 2010 or so reading about companies relocating to Detroit because office space was virtually free. We might see housing prices under control by the middle of next year not because of anything inherent to housing, but instead because of people having to live near an office they now live at and not just relocating to wherever they want.

theoverlook

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Re: What explains this COVID housing bubble?
« Reply #39 on: August 27, 2020, 07:41:07 AM »
COVID could be driving commercial real estate prices to record lows this year and next. While single family homes skyrocket in price, commercial office buildings are becoming fire sales. I'm expecting a new cubicle next year, or possibly even having one assigned for part time use this year. If commercial real estate prices crash hard enough, I think my company may go for 100% in-office work for the first time since I've worked here.

I'd love that to happen, I have some funds available and am looking to buy. But so far I haven't seen fire sale pricing - what market are you seeing that?

Also, just curious, how does commercial real estate pricing affect your work from home status? Just the availability of cheap office space makes them want to use it?

economista

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Re: What explains this COVID housing bubble?
« Reply #40 on: August 27, 2020, 09:03:23 AM »
I'm an asset manager working in commercial real estate for the federal government and the future of the commercial real estate market is completely up in the air right now. From what I'm seeing, there are a lot of government agencies that had no work from home policies prior to the pandemic and now they are realizing that work from home can be a completely viable alternative. Additionally, executive agencies have had an executive order for years now to consolidate space and downsize as much as possible. For my agency, this means we only have enough desks for half of our employees to be in our main office building at a time - we do desk sharing/hoteling and almost everyone works from home at least one day per week under normal circumstances. Legal counsel is the only division that has private offices and even our directors and the regional administrator sit out in the open office environment just like everyone else. We don't even have cubicles anymore - there are no walls between any of the desks.

What this pandemic has shown us is how quickly a new virus can pop up and cause havoc - we might get a vaccine for COVID-19 in the next year, but how long until another virus pops up and we are back in the same position we are now? Because of that, we received new regulations that say for employees to return to the building we need to have social distancing, no desk sharing, etc. It will require hundreds of thousands of dollars of remodeling and furniture procurement, as well as a new office building where we could double our footprint. There is no way we are able to do that. The point of view our agency has taken is for the time being, anyone who can do their job remotely (and we've been doing it for months now) will stay remote until those restrictions are lifted, and after that we will still have a "new normal" that will likely involved a much larger % of the workforce on full time telework because it sounds like desk sharing and hoteling are now a thing of the past.

I know there are many other agencies in the same boat and we are preparing for there to be a net decrease in need for commercial office space. I already have two projects in the planning phases that have been cancelled because they are smaller offices with 4-5 employees and they have decided to save on rent by only renting a conference room as needed and doing away with their normal office space. Our portfolio is roughly 50% government-owned and 50% leased, so a large reduction in leased requirements will have a big impact on the commercial real estate markets around the country, especially is smaller, rural markets. As a result, all of the appraisals for our owned buildings have been put on hold for the time being because there is too much uncertainty to be confident that we are doing an accurate appraisal.

Sid Hoffman

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Re: What explains this COVID housing bubble?
« Reply #41 on: August 27, 2020, 04:55:40 PM »
I'd love that to happen, I have some funds available and am looking to buy. But so far I haven't seen fire sale pricing - what market are you seeing that?

Also, just curious, how does commercial real estate pricing affect your work from home status? Just the availability of cheap office space makes them want to use it?

For commercial real estate, I'm going off what my company's corporate properties people are saying. Here's a related article though: https://www.businesstimes.com.sg/real-estate/us-commercial-property-prices-fall-worst-yet-to-come

It could be a slow decline though, as small businesses go under and big companies might be taking quite a while to make decisions on leasing the larger properties. As for my company specifically, they keep telling us that we're more productive in shared work spaces, so they expect productivity to rise significantly when they can get more employees in the same buildings, potentially even collapsing certain markets from having, say, 3 small offices to 1 large office. I'm not sure I buy that, but they're certainly intent on trying anyway.

fixie

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Re: What explains this COVID housing bubble?
« Reply #42 on: September 01, 2020, 10:09:29 AM »
My guess is it's a combination of factors that the coronavirus has simply exacerbated. In big West coast cities we have huge problems with homeless populations and servicing their needs. Where I live there are needles and garbage everywhere and piles of human waste and pretty little wooded pocket parks are full of tents and open latrines. I see this as monied middle class and  elite workers escaping the city because they can. I don't think I would blame them. For my part I've been looking for property for 15 years and just found my forever property on 50 acres. I'll soon be commuting and telecommuting and working from the farm as much as possible. As we go into winter I think that we're going to have another big spike in coronavirus cases which will lead to rolling shutdowns.  couple that with the upcoming elections and the almost guaranteed social unrest and the cities look like hell holes.
The bummer about the coronavirus for me is that on hikes and camping trips I used to consider quite remote I now see piles of human waste and toilet paper and garbage and used masks and shitstained bandanas and diapers and all the other garbage that goes with humanity in what used to be very beautiful places.

ketchup

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Re: What explains this COVID housing bubble?
« Reply #43 on: September 01, 2020, 10:40:08 AM »
I think I'm witnessing the bubble grow.  Last week there were four houses for sale in the neighborhood of my empty house I hope to offload soon.  They're all basically the same house (subdivision built in the 60s, and all similarly "updated"), and they were 170-180k.  This week there are only two for sale, and they're both listed for 185k.  I need to get this sucker on the market.  I bought in 2015 for 99k.

Mr. Green

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Re: What explains this COVID housing bubble?
« Reply #44 on: September 02, 2020, 05:44:45 PM »
I see similar patterns in both of the housing markets I keep tabs on. It's basically a perfect storm. The lowest interest rates in history have put a strain on the landing industry, lengthening the time it takes to close on a house. COVID has people either holding on to houses, or running to buy a house because of the uncertainty. So we end up with incredibly low inventory, that doesn't look as low as it actually is because almost everything is under contract due to the time it takes to close a sale now.

Prices in the neighborhood where we used to live and still own a townhouse have stagnated for years, with houses bringing 250-260k. However, nothing is for sale now so the last townhouse that listed was 280k and it was under contract almost immediately.

Also, generally, as rates go lower house prices go higher because it's all about the monthly payment. Unfortunately, this negatively impact those of us looking to buy with a cash because a mortgage cannot be obtained for whatever reason.

Chris Pascale

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Re: What explains this COVID housing bubble?
« Reply #45 on: September 02, 2020, 09:42:39 PM »
I think I'm witnessing the bubble grow.  Last week there were four houses for sale in the neighborhood of my empty house I hope to offload soon.  They're all basically the same house (subdivision built in the 60s, and all similarly "updated"), and they were 170-180k.  This week there are only two for sale, and they're both listed for 185k.  I need to get this sucker on the market.  I bought in 2015 for 99k.

Unless you have a good reason for staying, it would be great to get the money out of it.

I bought my home in 2014 for $310,000. A year ago I probably could have gotten $380,000, and am now selling for $430,000. Had I not let a cash buyer lock it up, who knows what a bidding war with an open house would have brought.

In my area, it seems that any home under $500k is hard to buy, but those over $600k are a little more difficult to sell. We wandered into a home seeing the Open House sign on our way to another, and upon entering I saw the price tag of $1MM. Seeing that, I let the agent now we're looking for something that's half as much, and his reply was, "you can still look around if you want."

He was so bored, he'd rather non-buyers waste his time than go away. Or he was a serial killer and my good manners saved me.

ketchup

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Re: What explains this COVID housing bubble?
« Reply #46 on: September 03, 2020, 11:18:13 AM »
I think I'm witnessing the bubble grow.  Last week there were four houses for sale in the neighborhood of my empty house I hope to offload soon.  They're all basically the same house (subdivision built in the 60s, and all similarly "updated"), and they were 170-180k.  This week there are only two for sale, and they're both listed for 185k.  I need to get this sucker on the market.  I bought in 2015 for 99k.

Unless you have a good reason for staying, it would be great to get the money out of it.

I bought my home in 2014 for $310,000. A year ago I probably could have gotten $380,000, and am now selling for $430,000. Had I not let a cash buyer lock it up, who knows what a bidding war with an open house would have brought.

In my area, it seems that any home under $500k is hard to buy, but those over $600k are a little more difficult to sell. We wandered into a home seeing the Open House sign on our way to another, and upon entering I saw the price tag of $1MM. Seeing that, I let the agent now we're looking for something that's half as much, and his reply was, "you can still look around if you want."

He was so bored, he'd rather non-buyers waste his time than go away. Or he was a serial killer and my good manners saved me.
We moved out two years ago.  If we cash out now and it goes how I hope, we'll look like geniuses instead of idiots for sitting on it so long. :)

affordablehousing

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Re: What explains this COVID housing bubble?
« Reply #47 on: September 03, 2020, 12:21:47 PM »
I agree with the many that see this as the result of natural housing need patterns, with lowered inventory and low borrowing costs and "traditional" reasons for continued home price support. I think there is a whole adoption curve for renters and starter home owners up and leaving their urban locations and I think we are still fairly near the early side of it. It takes time to fix up that van, get the vlog going and transition to a new life. We all know a "vaccine" will come right before the election, which should reassure some people to stay in place, and the families with a lot invested in their neighborhoods will be the last to leave, waiting at least a year to see if school happens in 2021 or 2022. It will be interesting to see all these liberal urbanites repopulating to politically mixed or conservative suburbs and rural areas.

I think there is a drop coming, and a huge drop in commercial real estate, but that will happen later. That said, contractors are backed up and busy everywhere around us. It seems like there are at least three jobsite portapotties a block. Money has to be spent somewhere!

Frankly, I'm looking forward to the cities emptying out a bit.

CNM

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Re: What explains this COVID housing bubble?
« Reply #48 on: September 03, 2020, 12:23:11 PM »
My realtor says the supply of available houses for sale is lower, so there are fewer to choose from.

That is definitely true in my area- lack of homes for sale.

MrsCoolCat

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Re: What explains this COVID housing bubble?
« Reply #49 on: September 18, 2020, 02:11:59 PM »
Can I just say I feel your pain? Housing here is ridiculous and I'm not sure I want to pay the premium right now. I may just risk it and wait just to see what happens by next year.

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