Housing...It's more than inflation...

[ctechbob]

Florida has a new problem now. Homeowners insurance is either expensive or not available. Many companies have decided to leave the state.
For the last several years, roofing companies have had this thing going on where they could prove storm damage and get significant payouts from homeowners ins.
That's now come back to bite them. We are also getting into hurricane season, so there's not a better time to cut and run.

That happens here in GA as well. There were a bunch of houses built with dodgy shingles, and roofing companies manage to get them replaced by inurance. My house eligible, but I'm not doing it. It's not right, and it is going to cost me in the long run to replace my roof, but I just can't force that off onto my insurer.

 

[Trav]

Check this out and if you want off street parking it will cost you another 100K. My niece got a deal on a parking spot for 80K.

https://www.realtor.com/realestateandhomes-search/Beacon-Hill_Boston_MA

 

[Dave Hess]

Inside those buildings are nice but zero possibility I could ever live in a building with no garage or yard.

I am aware that non street parking is extra.

 

[RooflessVW]

Kinda cheap where I am. Complain all ya want, house prices are kinda like car prices: HIGH. What ya gonna do

All I know is I couldn't afford to buy my house today.

 

[JeffKeryk]

All I know is I couldn't afford to buy my house today.

My neighbors tell me even if their kids get a good education they cannot live in this area.
It's a double edged sword.

 

[GMBoy]

All I know is I couldn't afford to buy my house today.

Same with me. I bought my 10acre lot in 2011 for a very good price. Built my house and shop in 2014. Added the horse barn in 2015. With all that said the price my house is able to bring if I sold today I could not afford to buy it. Basically the current value is 4x what it cost me to build. I would love to sell and pocket some cash but I like where I am.

 

[Trav]

Inside those buildings are nice but zero possibility I could ever live in a building with no garage or yard.

I am aware that non street parking is extra.

I always liked living in the big city but not big US cities. I wouldn't live in Boston if someone else paid for it, but some like my niece love it.

 

[Skippy722]

All I know is I couldn't afford to buy my house today.

Same here, and we’ve been here for barely 2 years. Similar homes are going for ~35% more than what we paid for ours.

 

[ecotourist]

There is a world wide boom in housing prices.

I live in a very nice, semi rural neighbourhood, near the coast of Vancouver Island and house prices here have doubled in the last 6 years. You can't buy a house in this neighbourhood any more for $1M. A not very nice house nearby with very poor street appeal and no usable front or back yard sold a few months ago for $1.2M. The buyer has been renovating non stop ever since.

The government has taken a number of steps to discourage foreign buyers (purchase surcharges, annual property tax surcharges for non residents, taxes on unoccupied houses). But foreign buyers aren't the problem here anyway.

Part of the problem is blind bidding. People seem to go crazy whenever there are several bidders. Most houses are selling above listing, sometimes for hundreds of thousands above listing.

Another issue has been the very low mortgage rates. People think that if they can afford the payments they can afford the house. I'd hate to be them in a few years when they have to renew their mortgage at several % higher rates.

 

[Hillbilly Deluxe]

I'm pretty sure that most all commercial, some industrial and most all residential construction is about to come to a screeching halt.

Most power companies are telling everyone that wants to put in a new service/transformer that they are seeing 100+ week lead times. That's 2 years to get new power/upgrade (I'm not talking about upgrading your home's 125 amp service to a 200, I'm talking about increasing the service at a commercial/industrial building from 2000 amps to 4000 amps to add-on/etc).

Most larger switchgear/panels are 50+ week lead times.

These two things alone mean IF you can afford to build a building (commercial/Industrial), you can't turn the power on.

Steel - 40+ week lead time
Concrete - unreal lead time plus cost

Couple all these supply problems with the cost, you can't really amortize a building right now. You can't increase your rents or price of goods enough to pay for a new building in the generally accepted 10-15 years. You're looking at 20-25+ years to pay for a building now and at that time, it's time for major renovation of most of it.

If you don't need a building built, you don't need a design. So I see major layoffs in the Civil Engineering, Architecture, MEP, etc. design world coming.....

 

[Hillbilly Deluxe]

Another issue has been the very low mortgage rates. People think that if they can afford the payments they can afford the house. I'd hate to be them in a few years when they have to renew their mortgage at several % higher rates.

Only a fool would have taken a variable APR when rates were 2% (or lower). If you did do a variable rate in the last few years, you deserve what you get.

 

[Silver]

As part of the de-evolution phase, humans are becoming desensitized to the cost of things. I just wonder what their retirement will look like.

 

[earlyre]

The 'middle' of the USA is known for having much more affordable housing prices than either 'coast', nevertheless, even in the DFW, TX metroplex housing prices are up 20% year-over-year!

My Brother lived In North Richland Hills( Tarrant Co. FW side of the metroplex) for around 20 years, bought the house for ~$70k in the mid - late 90's. Sold it in 2016 for $140k. that owner put in new countertops,sinks/faucets and "hardwood" floors throughout. (previously a combo of Carpet, Parquet in the entryway, and Linoleum in the Kitchen) they sold it in '18 for $204,900, Zillow currently values it at $331,100.

now, my brother still made money on his move, sold that house for $140k, bought the one up here for $114k, but dang...what a difference a few years makes.

 

[JeffKeryk]

My Brother lived In North Richland Hills for around 20 years, bought the house for ~$70k in the mid - late 90's. Sold it in 2016 for $140k. that owner put in new countertops,sinks/faucets and "hardwood" floors throughout. (previously a combo of Carpet, Parquet in the entryway, and Linoleum in the Kitchen) they sold it in '18 for $204,900, Zillow currently values it at $331,100.

now, my brother still made money on his move, sold that house for $140k, bought the one up here for $114k, but dang...what a difference a few years makes.

My folks bought their home (new, 1600 sq ft, smallish lot) in Sunnyvale, CA in Dec 1969 for $28K, which was a lot at that time.
I sold after my Dad passed in July 2019 for $1.9M. It sold the 1st weekend with 3 offers all over asking with no conditions.
It is $2.7M today.

 

[ecotourist]

Only a fool would have taken a variable APR when rates were 2% (or lower). If you did do a variable rate in the last few years, you deserve what you get.

In Canada a long term mortgage (say a 25 or 30 year mortgage) is renegotiated every 5 years. If interest rates have changed since the mortgage was taken out, the rate for the next 5 years goes up or down too.

You can take out a variable rate mortgage (where the interest rate moves up or down regularly with the bank rate) or a fixed rate mortgage (at a higher rate, which stays fixed, but only for 5 years).

So you can get into trouble 2 ways - the interest rate on your variable rate mortgage moves up, or you have to renegotiate your mortgage after 5 years and interest rates are higher, potentially much higher.

Middle income families in my neighbourhood are buying houses that cost well over $1M. Let's say you mortgage the $1M part. Assume mortgage rates move from say 3% to 5% (both made up numbers). The monthly interest part of your mortgage payment goes from (roughly) $2500 to $4100. That would be a big hit for the average family. People who can't pay it will have to sell their houses - quite possibly many people will be selling at the same time. When you get into this price range the big numbers can lead to financial ruin even for people with good incomes.

In Canada we have recourse mortgages. You can't walk away from your house and mortgage. If the bank sells your mortgaged house because you stopped making the payments, and the sales proceeds don't cover the amount owing, you owe them the difference.

 

[Dave Hess]

My folks bought their home (new, 1600 sq ft, smallish lot) in Sunnyvale, CA in Dec 1969 for $28K, which was a lot at that time.
I sold after my Dad passed in July 2019 for $1.9M. It sold the 1st weekend with 3 offers all over asking with no conditions.
It is $2.7M today.

Sounds similar to a woman I know. Parents passed away and she inherited a house in a very nice neighborhood.

That pretty much allowed her to retire 10 years earlier.

 

[Dave Hess]

As part of the de-evolution phase, humans are becoming desensitized to the cost of things. I just wonder what their retirement will look like.

They will probably be living in a tent in Slab City, CA.

 

[JeffKeryk]

Sounds similar to a woman I know. Parents passed away and she inherited a house in a very nice neighborhood.

That pretty much allowed her to retire 10 years earlier.

Let's just say I made sure my sister and a few others were taken care of.

 

[GMFan]

I'm pretty sure that most all commercial, some industrial and most all residential construction is about to come to a screeching halt.

Most power companies are telling everyone that wants to put in a new service/transformer that they are seeing 100+ week lead times. That's 2 years to get new power/upgrade (I'm not talking about upgrading your home's 125 amp service to a 200, I'm talking about increasing the service at a commercial/industrial building from 2000 amps to 4000 amps to add-on/etc).

Most larger switchgear/panels are 50+ week lead times.

These two things alone mean IF you can afford to build a building (commercial/Industrial), you can't turn the power on.

Steel - 40+ week lead time
Concrete - unreal lead time plus cost

Couple all these supply problems with the cost, you can't really amortize a building right now. You can't increase your rents or price of goods enough to pay for a new building in the generally accepted 10-15 years. You're looking at 20-25+ years to pay for a building now and at that time, it's time for major renovation of most of it.

If you don't need a building built, you don't need a design. So I see major layoffs in the Civil Engineering, Architecture, MEP, etc. design world coming.....

Yep. I saw the lead times for electrical switchgear and switchboards, transformers and now even electrical panels. It’s one of the reasons I left MEP for a new job.

 

[Hillbilly Deluxe]

Yep. I saw the lead times for electrical switchgear and switchboards, transformers and now even electrical panels. It’s one of the reasons I left MEP for a new job.

Smart move. There's still a lot of need for MEP folks in other sub-sectors, especially dealing with industrial clients and even at plants.