In shock at the asking price of single family homes in no growth, low density areas

[SwampSurvivor]

The same way how you keep jealousy in check between good and bad employees. Some who has to come to office will be paid more or have an easier job (only do things that cannot be done remotely).

In my experience it works the opposite.

The people who get paid the most get the convenience to work from home. Or vacation homes. Or camps. Whereas the folks who don't make a lot of money, even if an office position, have to go to work every day.

 

[Owen Lucas]

I have friends who are in the lending business and they're pretty much in consensus that here in the next few years, home mortgage rates will likely be close to the 8-10% range. I'm not sure that I am that convinced of this, but it's certainly a possibility and that would have a drastic impact on home inventory and price.

That is pretty amazing, something has to give.

A general rule I heard about is for every 1% in interest rates increasing, home prices go down 10% and vice versa. I'm sure there is a curve to this rule so at 8%, home prices should be massively reduced. I'd rather deal with the rates at this point than these over inflated prices, I can at least pay the loan off early.

 

[PandaBear]

In my experience it works the opposite.

The people who get paid the most get the convenience to work from home. Or vacation homes. Or camps. Whereas the folks who don't make a lot of money, even if an office position, have to go to work every day.

In a way, it is part of the bargaining power. People make more if they are valuable / not replaceable. Those who weren't able to bargain end up stuck in a bad company being paid low wages.

Which is why all of a sudden with inflation, work from home, low interest rate, etc we end up having a great resignation.

 

[JustN89]

That is pretty amazing, something has to give.

A general rule I heard about is for every 1% in interest rates increasing, home prices go down 10% and vice versa. I'm sure there is a curve to this rule so at 8%, home prices should be massively reduced. I'd rather deal with the rates at this point than these over inflated prices, I can at least pay the loan off early.

Well, it's been 20 years since we last saw interest rates that high. I'm not sure what home prices will do, but you're right, something has to give.

 

[edyvw]

It "depends". A huge part is you get to spend less time commuting, like, 2 hrs a day. You are talking about money and time that companies can save by paying you less. Another is, you can get a lot more quality of employees per dollar if you can hire them in some low cost area instead of at your HQ. In my work the same quality employees cost about 25% less in rural out of state than locally in Silicon Valley, AT LEAST.

So you may have a quality guy in Alabama who would stay with you for 10 years, but the same money in California would only get you a guy who stay for 1 year. Of course the top guy would still get recruited from Alabama to California and paid California money + more by the good companies (i.e. Apple, Google, Amazon, Facebook, etc), but not every employer is top quality and will pay top dollars, so....

Also don't forget, with work from home completely, work from home 4 days a week, etc, people are willing to live further away (sometimes way further), so the "area" has gotten larger than ever. 50 years back people probably live 50 miles away at most, now they probably live 100 miles away if they are going to come into office 1 day a week.

True. My friend is software manager and just moved from LA to Denver. Their company accountant, which apparently they really like, moved to farm in KY. They asked him to stay in LA and he said only way he is going to work is if he lives on that farm, and they agreed.
In December skiing here I met some lady who moved from NYC to Denver 3yrs back. She skied first time when she moved here. She liked so much, that she bought some cabin close to Frisco here and moved from Denver there. She works for some financial company in NYC, but ski’s like 3-4 days a week.
One of the reasons why we have ridiculous shortage of housing in the mountains which affects seasonal employees in resorts, are WFH people who moved from NYC, Chicago, LA, Dallas, ATL etc. and just live there. The problem is that now they are building so much that they will turn those small ski towns into big cities.

 

[alarmguy]

Well, it's been 20 years since we last saw interest rates that high. I'm not sure what home prices will do, but you're right, something has to give.

Yes and it will, it always does. Supply and demand rules. Since demand in the case of homes is based on cost to the buyer.
High interest rates = Lower home prices ----- Low Interest rates = High Home Prices

We are entering a period of higher interest rates and home prices will adjust.
We also had a historical world event just take place that lowered inventory as people hunkered down. Just as it is taking a couple years to get this virus under control, it will take a couple years for the housing market to re-adjust. (so its not going to happen overnight, maybe)

 

[PimTac]

I am surprised that anyone would be shocked by the rising home prices. They have been doing that for years.

The demand is high in the low growth rural areas because of the high prices in the cities. Buyers naturally expand their search radius when they encounter high prices and also many cities have additional problems as well. A 50-60 mile or more commute is not that uncommon.

 

[GON]

I migh

I am surprised that anyone would be shocked by the rising home prices. They have been doing that for years.

The demand is high in the low growth rural areas because of the high prices in the cities. Buyers naturally expand their search radius when they encounter high prices and also many cities have additional problems as well. A 50-60 mile or more commute is not that uncommon.

I might suspect you are from a premium real estate state like California, Florida, Utah, Idaho, Texas, Tennessee, North Carolina?

Many homes in Illinois, Pennsylvania, New York, etc are just now hitting their highs hit in 2006-2008. Some owners with homes in these states may still be "underwater". If you own a home in the West or South, what seems normal (rising prices) is very different from what homeowners in the Upper Midwest and North East have experienced.

We bought a home in Illinois when I was transferred to Chicago in 2004. We have been unable to sell it, it has been "underwater" until just this year. And it is a desirable property on paper. 4 Beds, 3 baths, ranch, 2x6 construction on waterfront, on 2 acres and within commuting distance of Chicago. Can park 30 cars on the driveway. We have tenants in the home now. We are hoping the market lasts so we can sell this home when the lease ends late this spring.

 

[Leo99]

In my experience it works the opposite.

The people who get paid the most get the convenience to work from home. Or vacation homes. Or camps. Whereas the folks who don't make a lot of money, even if an office position, have to go to work every day.

In my company it's the nature of someone's job. The lab folks need to come in because they don't have HPLCs and lab equipment at home. Everyone else is working from home. Some folks have moved and we hire people 1000s of miles away. Anywhere except Colorado. Colorado has some weird laws or something

 

[BMWTurboDzl]

The market is insane right now. It says my house, which is a generic tract home built in 1967/8 that my grandparents bought for $32K in 1968, is worth $1,362,600. A single story house around the corner from me just sold for $1.4M. These are just regular tract houses built in the 60s.

California is very popular with buyers who have large families or family overseas who will gladly gift hundreds of thousands of dollars to buy a home. The pooling of funds it not uncommon.

 

[glock19]

In my company it's the nature of someone's job. The lab folks need to come in because they don't have HPLCs and lab equipment at home. Everyone else is working from home. Some folks have moved and we hire people 1000s of miles away. Anywhere except Colorado. Colorado has some weird laws or something

Colorado requires companies to post a salary range in job postings. This gives them less leverage when negotiating your salary.

 

[SeaJay]

As bad as it sounds we really need a recession to pop bubbles and crash prices of everything back to normal.

Unfortunately, lots of folks that are having trouble buying a house today are the first to be let go from their jobs in the sort of a serious recession needed to pop bubbles and crash prices.

 

[gmh101358]

Hey dont complain.....I retired at 49 off buying and selling condo's in North Scottsdale. Condo's I paid 180-200k sold for 750k to 900k....
Im going to sell my House now and move into an apt for My old age .....yeah I paid 135k for this house in 07....only problem is im taxed pretty bad .....

 

[Dave Hess]

Hey dont complain.....I retired at 49 off buying and selling condo's in North Scottsdale. Condo's I paid 180-200k sold for 750k to 900k....
Im going to sell my House now and move into an apt for My old age .....yeah I paid 135k for this house in 07....only problem is im taxed pretty bad .....

What was the most condos you owned at the height ?

How many ?

 

[nomas]

The sad reality is that new homes aren't being constructed to keep pace with the growing population.
Unfortunately, apartments are what many developers would rather build because it offers more profit.

New apartments have popped up and will continue to pop up making more and more of the population renters as the population grows.

New, small affordable homes like a 1400 SF 3 bedroom ranch in a residential neighborhood are no longer being built.

Not true here . There is a builder here that is developing neighborhoods as fast as he can get approvals . One near me will have 800 units .

 

[gmh101358]

What was the most condos you owned at the height ?

How many ?

At once 4? ....most were bought in 99 when the tech boom was over....My wife worked for wells fargo and got the list of the upcoming repo selloffs.....we bid....some only 2-3 people showed up.....we would fix them up and turn them over to a friend who owed a prop mangement company.....and we rented them for "golf vacation homes" we did dont make that much money till 2006 when he price went insane.....I kept one till 7 months ago....the biggest the 3 bedroom 2300 sq ft.
I worked fo IBM in server sales so I made pretty good money to keep buying up condo's.....most all were in Kierland area.....I noticed the 4 bedroom models are seling for 2.5 million now.....crazy

 

[Dave Hess]

You definitely did well.

 

[Owen Lucas]

At once 4? ....most were bought in 99 when the tech boom was over....My wife worked for wells fargo and got the list of the upcoming repo selloffs.....we bid....some only 2-3 people showed up.....we would fix them up and turn them over to a friend who owed a prop mangement company.....and we rented them for "golf vacation homes" we did dont make that much money till 2006 when he price went insane.....I kept one till 7 months ago....the biggest the 3 bedroom 2300 sq ft.
I worked fo IBM in server sales so I made pretty good money to keep buying up condo's.....most all were in Kierland area.....I noticed the 4 bedroom models are seling for 2.5 million now.....crazy

Being "in the industry" what's your opinion on interest rates, staying, going up?

 

[gmh101358]

Being "in the industry" what's your opinion on interest rates, staying, going up?

LOL im not Flipping anymore im 64 pushing 65 and retired with no plans to buy any real estate for the rest of my life....My wife died 4 years ago......and i have no kids or living relatives to leave anything to....so when I " kick the bucket" all my funds will goto charity or multi ones. Im sure my wife kids will be crying but I cant stand the greedy girls trying to KMA thinking im going to leave them a huge chunk of money and they can pay off their homes and retire at 55.....If my wife only knew of the crap they pulled trying to scam me she would turn over in her grave.....
My gut feeling is ....slow rise in rates....

 

[BMWTurboDzl]

At once 4? ....most were bought in 99 when the tech boom was over....My wife worked for wells fargo and got the list of the upcoming repo selloffs.....we bid....some only 2-3 people showed up.....we would fix them up and turn them over to a friend who owed a prop mangement company.....and we rented them for "golf vacation homes" we did dont make that much money till 2006 when he price went insane.....I kept one till 7 months ago....the biggest the 3 bedroom 2300 sq ft.
I worked fo IBM in server sales so I made pretty good money to keep buying up condo's.....most all were in Kierland area.....I noticed the 4 bedroom models are seling for 2.5 million now.....crazy

Wow. I would've been fired in a NY minute.