2017 Housing Market & Inevitable Crash

[Mr Nice]

Originally Posted By: Nick1994
I was thinking of posting about this.

A house on my grandma's street is closing right now, asking price was $399,000. Absolutely ridiculous.

My next door neighbor sold his house last year, was asking $225k and it sold for $240k 3 days later. Stupidly high prices.


That's really not a lot of money for a house.

 

[Mr Nice]

Originally Posted By: PimTac
Home prices in the Seattle-Tacoma metro area have skyrocketed in recent months mainly because British Columbia placed a 15% tax on foreign buyers in their housing markets. Their reason was to slow down the price increases there. The real result has been Chinese buyers who shifted their sights a few hours south of Vancouver where they previously had been purchasing.

Increases on property taxes plus the sales tax here going over 10% recently have made this area unaffordable for first time buyers now. Many are driving 50-60 miles or more away just to find anything affordable. Stock of available homes is drying up as well.


When my brother was in the Navy in San Diego. He worked with a guy that rode a motorcycle 105 miles to work everyday because the only house they could afford was far away from the base. He did it for 2 years and then retired from the Navy. To me that's crazy, but his wife wanted to live in California.

 

[Shannow]

http://www.abs.gov.au/ausstats/[email protected]/Latestproducts/6416.0Main%20Features2Dec%202016?opendocument&tabname=Summary&prodno=6416.0&issue=Dec%202016&num=&view=

Quote:
Weighted average of the eight capital cities (4.1%)

The RPPI for the weighted average of the eight capital cities rose 4.1% in the December quarter 2016. This follows rises in the September (+1.5%) and June (+2.0%) quarters 2016.

The RPPI rose 7.7% through the year to the December quarter 2016.

In the December quarter 2016 the HPI rose 4.7% and the ADPI rose 2.3%. Through the year to the December quarter 2016, the HPI rose 8.9% and the ADPI rose 4.0%.

The quarterly HPI result follows rises in the September (+1.6%) and June (+2.3%) quarters 2016. The ADPI result follows rises in the September (+1.2%) and June (+1.4%) quarters 2016.


Sydney (5.2%)

The RPPI for Sydney rose 5.2% in the December quarter 2016. This follows rises in the September (+2.6%) and June (+2.8%) quarters 2016. The index rose 10.3% through the year to the December quarter 2016.

Over the December quarter 2016 the HPI rose 6.1% and ADPI rose 3.1%. This was the third consecutive quarter of growth for the HPI and ADPI in Sydney after falls in the March quarter 2016 and December quarter 2015.

For established houses, strength was again seen across most segments of the market, particularly in the middle segments ($1,350,000 to $1,690,000). Through the year to December, house prices rose by 12.0%.

For Sydney attached dwellings, growth was mixed across segments though particularly strong in the mid to upper segments ($840,000 to $1,000,000). Through the year to the December quarter 2016, the ADPI rose 6.7%.

 

[IndyIan]

The average detached house sold in the Toronto Area this spring is $1.2M. Median household income is around $70k.
Seems a little unsustainable to me, but supply is limited so perhaps Toronto is now like other large cities, like London or New York?

 

[jeepman3071]

Originally Posted By: 69GTX
Here in Southeast Connecticut the market never came close to recovering from the 2009-2011 crash. It's for sure a buyer's market. Still a lot of foreclosures hanging around. I've seen a number of homes in my area stay in foreclosure/empty for 2-3 years. The home next to me was foreclosed upon and sat vacant for nearly 3 years while it fell apart. My wife and I called it "squirrel manor" because some of the siding/roof edging had fallen off and the rodents were coming and going as they please. That one needed a new roof, a complete interior remodeling, and a total demo of the enclosed all summer porch. That home is finally "sale pending." I can think of half of dozen homes within 1/4 mile of me that went through a similar 1-3 yr process where they looked horrible until someone showed up to finally buy/remodel.


Yup, CT is terrible right now. My neighbor is a builder. He said nobody is buying right now. There are so many under employed or unemployed people in CT that nobody can afford homes. Everyone is leaving CT if they have the chance.

As an entry level 26 year old fairly recent college grad, it is very hard to find a decent paying job. Right now I run the IT support, student information system and state reporting for an entire town/school district at $15/hour with very little benefits. All of the big employers around me (UConn, the State, other colleges) all have hiring freezes. The state is the largest employer in CT and they are about to lay off up to 4,000 more employees. Nothing is permanent either. Before this job I worked at the state as an IT contractor. They loved my work there but the contract ended due to funding. They have no money for full-time state employees so everything is contracted out until projects fail from lack of funding.

 

[SeaJay]

Just sold a house last week on eastern end of long island. Market is fidgety. With a very realistic asking price was able to sell for 4% and change below the ask. I don't see any selling above the ask around here recently. A lot of the homes around here are second homes, so it may not be typical for other areas.

 

[Lolvoguy]

Things are certainly out of whack.

As a renter, we're just happy the rents are controlled and can only be increased at 2% increments per year.
Our neighbors in the same building drive Audi TT's, BMW's and Land Rovers. Might as well have a nice ride if you cannot afford a condo.

 

[Wolf359]

Originally Posted By: Lolvoguy
Things are certainly out of whack.

As a renter, we're just happy the rents are controlled and can only be increased at 2% increments per year.
Our neighbors in the same building drive Audi TT's, BMW's and Land Rovers. Might as well have a nice ride if you cannot afford a condo.

No rent control in our state. You can raise it as much as you like. If you go too high, they just move out.

 

[dja4260]

I recently had 3 offers on my home. Will be selling for 97.5% of asking. Market is flying.

 

[Mr Nice]

Very high rents only attract people with good jobs that can afford it but also those educated working people are not gutter savages that cause lots of grief.

Lots of idiots complain they can't afford to live in San Francisco and are always protesting. If you can't afford to live there you need to pack up and get out.

 

[Pop_Rivit]

There are a lot of differences between the 2007/2008 market and today. It's foolish to try to compare them.

 

[Nick1994]

Originally Posted By: Mr Nice
Originally Posted By: Nick1994
I was thinking of posting about this.

A house on my grandma's street is closing right now, asking price was $399,000. Absolutely ridiculous.

My next door neighbor sold his house last year, was asking $225k and it sold for $240k 3 days later. Stupidly high prices.


That's really not a lot of money for a house.
It is here. Prices were a lot lower and they've magically inflated massively.

 

[PimTac]

I can believe that. Every region is different in their price structure. West coast Florida is very cheap relative to the rest of the country but that didn't stop a friend of ours to sell a house last month for $103k that he paid $48k for two years ago.

Some parts of the US are astronomic mainly due to demand and also a good labor market locally. Seattle, Bay Area, to name two are really booming price wise. Another poster in this thread was lamenting the markets in Connecticut.

 

[supton]

Can't find it now, but I read that in 1950 the median house price was twice the median household income. The article went on to say it was 5x in 2015. Some random googling indicates that might be true in hot areas but overall it's more like 4x, maybe less. link. Seems to be to be unsustainable.

Originally Posted By: Shannow
It became unaffordable, so Govt started handing out money to first home owners to help for a deposit...so the prices automatically jumped by that amount.


Funny how that works, eh?

 

[surfstar]

Originally Posted By: Pop_Rivit
There are a lot of differences between the 2007/2008 market and today. It's foolish to try to compare them.



Yep, and the OP forgot to figure inflation into the equation.

Houses selling "at the same price" as 07/08, are actually still about 20% under, with inflation factored in.



Oh and here its over $600/sq ft.

Check out this "deal" on a fixer:
$575,000 2 Beds 1 Bath 900 Sq. Ft.
$639 / Sq. F

Looking for a contractor or investor looking for a good project. This home has loads of potential, but will require a cash sale based on lack of working heat and other necessary upgrades.
https://www.redfin.com/CA/Santa-Barbara/1635-San-Andres-St-93101/home/21594555
and for more fun, do the google street view and see how "great" the neighborhood is

 

[Mr Nice]

Some people can afford $600/sq ft, some people can't.

Nothing wrong with that $575,000 house if someone wants to buy it.

 

[supton]

Originally Posted By: Mr Nice
Some people can afford $600/sq ft, some people can't.

Nothing wrong with that $575,000 house if someone wants to buy it.


Very true. But there seems to be a lack of affordable housing for those won't can't.

 

[Vuflanovsky]

I think it's always interesting to see areas that are more and less susceptible to real estate boom and bust cycles and what qualifies as an "inevitable crash". My Bay Area condo lost 35% in appraised value after the 2008 downturn but my folks who live 15 miles away lost about 15% in their larger townhouse. Both are in nice suburban areas with low unemployment.

It seems places like Vegas, Phoenix, and numerous exburbs in California and throughout the country are considerably more susceptible to the bust cycles...so if a 575K fixer is an expensive house to you ( that might be comical in the Bay Area or Santa Barbara ), then it can really hinge on where and what it is versus what you paid for it. Single family homes near both my folks and I lost very little (~15%) and many have seen values double. Sadly, my condo would sell today for about what I paid for it in 2005 at the height of the market. On the other hand, my folk's townhouse is appraised at about 100K more than the 2008 valuation and approaching 3x what they paid for it in 1998. It can be a bit of a calculation to see where you actually are versus 2008.

Boom and bust and affordability can be a relative and subjective thing. If you expect something bigger than "The Great Recession" then I would think this area could potentially take it in the shorts. If not, then I wouldn't anticipate a long-term down trend just based on past history. If I lived in the San Joaquin Valley then my susceptibility to bust and values remaining lower would probably be greater. I'm sure that same dynamic would play out all across the country but in different ways.

 

[oilpsi2high]

Originally Posted By: surfstar
Originally Posted By: Pop_Rivit
There are a lot of differences between the 2007/2008 market and today. It's foolish to try to compare them.



Yep, and the OP forgot to figure inflation into the equation.

Houses selling "at the same price" as 07/08, are actually still about 20% under, with inflation factored in.



Oh and here its over $600/sq ft.

Check out this "deal" on a fixer:
$575,000 2 Beds 1 Bath 900 Sq. Ft.
$639 / Sq. F

Looking for a contractor or investor looking for a good project. This home has loads of potential, but will require a cash sale based on lack of working heat and other necessary upgrades.
https://www.redfin.com/CA/Santa-Barbara/1635-San-Andres-St-93101/home/21594555
and for more fun, do the google street view and see how "great" the neighborhood is

No, I didn't forget about inflation.

 

[fdcg27]

In Ohio, the boom in prices never really happened outside of a handful of areas that were considered highly desirable so the bust wasn't much of one either.
Most of the foreclosures here involved predatory lending in lower income areas.
The market now seems to be healthy, with homes selling quickly for decent dollars.
Interest rates remain low everywhere in this country, which can only help to support home prices.
Another factor might be the reluctance of builders to build lots of new homes on spec, which does appear to be a continuing issue.
In the early 2000s, homes were built in every cornfield a builder could buy.
Many people were worried about their livelihoods on 2008 so were reluctant to buy any home.
That is not the case today.