Real Estate market reply from recent Sep 8 podcast

[JasonH]

Pete said that it's crazy how the real estate market is going right now.

I just wanted to chime in that here in Houston, as an active home buyer, it's also just as nuts. A house will hit the market on a Tuesday, and by Wednesday it has an offer. Usually in the 150k - 250k range. Higher priced homes do sit a bit longer, but on average, MLS shows an average listing time of less than 20 days in the last 5 months.

I've been through quite a few real estate transactions in my life, both as a seller and buyer. This current market is fire, at least, from what I can tell, in Houston and Orlando. I imagine it's the same across the country.

Anyway, just wanted to respond to Pete's comment about the market. If you're looking to buy, NOW is the time. Rates are lower than even after the 2008 bust. If you're looking to sell, you should have an EASY time moving your property.

Disclaimer: I am not a licensed realtor, just an observer, who has had 3 houses yanked out from under him literally minutes before I was ready to make an offer, and the listing was 1.5 days old.

 

[hertamaniac]

I can corroborate that the central Florida market is generally selling higher than in the past few years. Although I am not selling my home this year, I did pull the trigger and last week purchased a lot to build or as a longer-term investment.

 

[NaptownMom]

I bet states with no income tax are going completely insane as people in New York and California look at very long periods of work from home.

 

[GAN]

Pete said that it's crazy how the real estate market is going right now.

I just wanted to chime in that here in Houston, as an active home buyer, it's also just as nuts. A house will hit the market on a Tuesday, and by Wednesday it has an offer. Usually in the 150k - 250k range. Higher priced homes do sit a bit longer, but on average, MLS shows an average listing time of less than 20 days in the last 5 months.

I've been through quite a few real estate transactions in my life, both as a seller and buyer. This current market is fire, at least, from what I can tell, in Houston and Orlando. I imagine it's the same across the country.

Anyway, just wanted to respond to Pete's comment about the market. If you're looking to buy, NOW is the time. Rates are lower than even after the 2008 bust. If you're looking to sell, you should have an EASY time moving your property.

Disclaimer: I am not a licensed realtor, just an observer, who has had 3 houses yanked out from under him literally minutes before I was ready to make an offer, and the listing was 1.5 days old.

I agree that housing in many markets is hot right now. I'm in the northeast and I'd say it's not as hot as an Orlando, it's still pretty competitive. Given that, unless I needed to buy or was looking for something down the road like land, I would avoid those markets at all costs. I can't see any logic of "investing" in a market where houses are in such high demand, especially when there is as much financial uncertainty as we're seeing. Buy low, not high ...and I think there will be better opportunities down the road. There are a lot of people hurting right now and if they're unable to keep up with mortgage payments ..that isn't a good thing for anyone. By all means ...don't take my advice, that's just the way I see it.

 

[macman752]

I believe that we will soon see another housing crisis akin to the 2008-2012 subprime mortgage mess. Housing prices are not sustainable in the current economy. Florida’s economists have told the legislature that unemployment will remain high until 2023. Currently, Florida landlords can’t evict non-paying tenants and mortgage holders are prohibited from beginning foreclosure actions. Once those barriers are lifted we’ll begin to see the true depths of the economic fallout due to the pandemic.

 

[UKYRob29]

I believe that we will soon see another housing crisis akin to the 2008-2012 subprime mortgage mess. Housing prices are not sustainable in the current economy. Florida’s economists have told the legislature that unemployment will remain high until 2023. Currently, Florida landlords can’t evict non-paying tenants and mortgage holders are prohibited from beginning foreclosure actions. Once those barriers are lifted we’ll begin to see the true depths of the economic fallout due to the pandemic.

Have you tried getting a mortgage? Good luck getting one without proving income and having 20% down.

 

[hertamaniac]

What we have seen is a driving shortage in desirable lots. There are now more out-of-state investors flocking to the Florida market (based on anecdotal observations/conversations) as remote working is becoming more favorable. So while the premise of another housing market correction is looming, the quality of remaining lots in potentially surging areas in central Florida is very limited.

In our case, we strategically targeted an area for a couple of years and are just now seeing a year over year increase in land value; we expect this trend to continue.

 

[nkereina]

Even though interest rates are low, I would assert its not the greatest time to buy. Where I live in upstate NY, houses are moving so quickly that nearly everyone is overpaying for them. Home values have not moved at the same rate, so buyers are having lots of trouble with appraisals (I work in banking). As an example, my sister-in-law is a realtor and recently had a home listed for $299K that borders a rough area of town, and it sold for $360K with nearly 20 offers. The appraisal was nowhere near that so the buyers are making up the difference in cash. They have almost no equity now and the home's value in that area won't increase to where it becomes a worthwhile purchase. There's certain circumstances where it can work out ok for a buyer, but the term "seller's market" in this environment means both that a seller will benefit from a quick/high priced sale, but its also not an optimal time for buyers.

 

[JasonH]

I believe that we will soon see another housing crisis akin to the 2008-2012 subprime mortgage mess. Housing prices are not sustainable in the current economy. Florida’s economists have told the legislature that unemployment will remain high until 2023. Currently, Florida landlords can’t evict non-paying tenants and mortgage holders are prohibited from beginning foreclosure actions. Once those barriers are lifted we’ll begin to see the true depths of the economic fallout due to the pandemic.

2008 was due to lenders and sub-prime mortgage lending (basically, lending money to people with bad credit with loan packages that were just not sustainable for the buyer). Then it all came to a head with people starting to short sell the lending packages.

That's not happening here. But I agree, prices are definitely higher in some areas where they should be, but I'm also seeing houses selling for way lower than they should be, mostly because the sellers just want a quick sell to get their equity out.

COVID has also had an impact. Just had a conversation with my realtor and a seller's realtor today about this exact thing - why are houses moving like they are? One theory we had was that people are working from home more, and need bigger houses with proper office space. People are also doing more outdoor activities. Apparently things like jet skis and boats are also moving pretty hot, which translates to more sales for people in those industries, which translates to increased income, which means people are able to afford better houses.

/shrug - This will definitely be a market to remember and study for years. But this is looking like the opposite of 2008.

That said, if anyone reading this is wanting to sell, NOW is the time to sell. Well, depending on your market trends, but most are trending that way nationwide in the USA from what I can see.

 

[JasonH]

Even though interest rates are low, I would assert its not the greatest time to buy. Where I live in upstate NY, houses are moving so quickly that nearly everyone is overpaying for them. Home values have not moved at the same rate, so buyers are having lots of trouble with appraisals (I work in banking). As an example, my sister-in-law is a realtor and recently had a home listed for $299K that borders a rough area of town, and it sold for $360K with nearly 20 offers. The appraisal was nowhere near that so the buyers are making up the difference in cash. They have almost no equity now and the home's value in that area won't increase to where it becomes a worthwhile purchase. There's certain circumstances where it can work out ok for a buyer, but the term "seller's market" in this environment means both that a seller will benefit from a quick/high priced sale, but its also not an optimal time for buyers.

Yea, if I could hold off on buying, I would. I am in a situation where I'm renting (divorce, etc etc) and have been for the last 10 months. I still have the $$$ from the sale of my house back in April, so that's what I'm using to get my new digs. But yea, I've had houses ripped out from under me because I refused to go over asking price in bidding wars (aka - no, I'm not gonna overpay, thank you) and not able to secure a contract because the sellers refuse to pay any closing costs for me (which is typical for a seller to cover SOME of the closing costs).

I recently heard of a transaction from a relator friend of mine where the seller actually wanted the buyer to cover the seller's moving expenses on top of 1% increase of the selling price AND the seller paid no closing costs for the buyer. And the buyer agreed because they REALLY wanted that house.

It's nuts I tell ya. So I'm just going with new construction instead. Found a place today (finally). But those are also flying off of the shelves. New construction in the Houston area is seeing 1-2% price increases every 2-3 weeks in most cases.

 

[nkereina]

It's nuts I tell ya. So I'm just going with new construction instead. Found a place today (finally). But those are also flying off of the shelves. New construction in the Houston area is seeing 1-2% price increases every 2-3 weeks in most cases.

Congrats! Great choice. DH and I built our house as new construction nearly 8 years ago, and we would do it again in a heartbeat. It can be a long process and comes with its own set of frustrations, but its worth it in the end. My best advice would be to be patient - my parents are currently building and I know their builder has had supplier issues as a result of the covid shutdown from the spring. Not only are materials hard to come by, but prices have increased. I would try to lock in a price you're comfortable with as soon as possible so that any future cost increases aren't passed off to you before you're under contract. Good luck!

 

[macman752]

2008 was due to lenders and sub-prime mortgage lending (basically, lending money to people with bad credit with loan packages that were just not sustainable for the buyer). Then it all came to a head with people starting to short sell the lending packages.

That's not happening here. But I agree, prices are definitely higher in some areas where they should be, but I'm also seeing houses selling for way lower than they should be, mostly because the sellers just want a quick sell to get their equity out.

COVID has also had an impact. Just had a conversation with my realtor and a seller's realtor today about this exact thing - why are houses moving like they are? One theory we had was that people are working from home more, and need bigger houses with proper office space. People are also doing more outdoor activities. Apparently things like jet skis and boats are also moving pretty hot, which translates to more sales for people in those industries, which translates to increased income, which means people are able to afford better houses.

/shrug - This will definitely be a market to remember and study for years. But this is looking like the opposite of 2008.

That said, if anyone reading this is wanting to sell, NOW is the time to sell. Well, depending on your market trends, but most are trending that way nationwide in the USA from what I can see.

I don’t think that I wrote that today’s situation is the same as 2008. I used “akin” or related but not the same. We currently have record low interest rates which was not the case in 2008. Yes, lending requirements have tightened since then but now people can buy a more expensive home because the lower interest rate translates to a lower monthly payment. Cheap money or lax lending rules yield the same result - lots of dollars chasing a limited supply of homes. Prices continue to climb until the balloon bursts. The economic damage from COVID will likely cause the balloon to burst.

I agree that it is a seller’s market. I’d hate to be trying to buy a home in some areas of the country.

 

[hertamaniac]

We just finished the purchase of a lot in central Florida. We are targeting a new build in the coming years. We met with a builder this week and they did advise about the alleged supply issues and price increases. The builder did confirm that putting a deposit and starting construction now would lock-in and/or minimize the risk of increased material pricing.

That being said, I offset that conversation stating that the area where we have homes is currently appreciating. The rate of appreciation, and magnitude of $, will easily counter the building material increases (projected). We are not going to sell and build out of fear for a material increase, but will be decided by the general real estate market in our area. The builder and our real estate agent almost looked shell-shocked in my statement, but understood. No arm twisting here.

 

[disneyworldsk]

Question: how will the wdw layoffs affect real estate market in that area? i am concerned that if i purchase based on living the disney dream that ultimately the parks, with the affects from layoffs, won't be the same standard and the areas surrounding it will lower in quality over time. have i purchased something relying on disney and 'that' disney of yesterday is gone and post pandemic disney doesn't look so good anymore?
my parents live in manhattan. they own. can't sell. entertainment is gone. streets are becoming dangerous. they're locked and stuck.
i don't want to be stuck.

 

[randumb0]

@disneyworldsk where did you buy?

 

[macman752]

Question: how will the wdw layoffs affect real estate market in that area? i am concerned that if i purchase based on living the disney dream that ultimately the parks, with the affects from layoffs, won't be the same standard and the areas surrounding it will lower in quality over time. have i purchased something relying on disney and 'that' disney of yesterday is gone and post pandemic disney doesn't look so good anymore?
my parents live in manhattan. they own. can't sell. entertainment is gone. streets are becoming dangerous. they're locked and stuck.
i don't want to be stuck.

It’s not just Disney. In central Florida it’s also the multitude of businesses that sell to or support Disney’s operations. Those businesses are also trimming staff and some, unfortunately, will not survive the downturn.

It’s too early to tell how real estate prices will be impacted. Florida’s governor allowed the foreclosure and eviction hold to expire. Presently, the federal government has moratorium on some eviction and foreclosure proceedings. Apparently the next stimulus legislation may contain some type of assistance for renters, homeowners and landlords. Sooner or later the income reduction due to layoffs and closures will begin to show up in real estate pricing.

 

[YesterDark]

Market in northern NJ is crazy. My house is currently on the market. About to hit the second weekend (10ish days on the market). We're in the higher value range so it'll go slower. Market down in Maryland where we're looking to move is equally fast.

 

[GAN]

Question: how will the wdw layoffs affect real estate market in that area? i am concerned that if i purchase based on living the disney dream that ultimately the parks, with the affects from layoffs, won't be the same standard and the areas surrounding it will lower in quality over time. have i purchased something relying on disney and 'that' disney of yesterday is gone and post pandemic disney doesn't look so good anymore?
my parents live in manhattan. they own. can't sell. entertainment is gone. streets are becoming dangerous. they're locked and stuck.
i don't want to be stuck.

Im not a professional by any means, but my personal opinion is that this time -from now to maybe mid 2021 is not a good time to buy in Central Florida if you don’t *have* to. I don’t think it will be as bad as your concerns, but there is almost no way there won’t be fallout of some kind that will cause issue in that market. The good news is there‘s a potential opportunity if the market does soften ...if you can wait it out.

 

[disneyworldsk]

Im not a professional by any means, but my personal opinion is that this time -from now to maybe mid 2021 is not a good time to buy in Central Florida if you don’t *have* to. I don’t think it will be as bad as your concerns, but there is almost no way there won’t be fallout of some kind that will cause issue in that market. The good news is there‘s a potential opportunity if the market does soften ...if you can wait it out.

Yes, I'm wondering same thing. you could look at this from both angles.