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It may depend on what interest rates are for some to afford to buy.
The interest rates combined with the property prices are the killer right now.
One wouldn't be that bad if the other was more reasonable. As it stands, the average buyer's purchasing power has been really hampered by the current climate.
Sure it does. Why bother having rental property that loses money every month? Rent has to over all the costs of ownership plus some profit for future maintence and income.
We invest in the area that we know, which is an upscale beach community in California. None of our properties have had positive cashflow from the start. Eventually they have, but it usually takes several years and in the meantime, we build equity and watch the property values climb.
The replacement cost is a big factor as is refurbishment cost. The hard cost of almost everything that goes into building or refurbishing a house has increased substantially since 2019. In addition, the high cost of labor and shortage of tradesmen further adds to the cost. All this makes bringing additional housing to market extremely expensive.
I split time between northeast TN and western NC. I live in northeast TN, my girlfriend lives in western NC, and I work for a western NC county government.
We have been looking to get a plumbing estimate for underslab work in NC for months now. It's almost impossible to even get a response, much less someone to come out and estimate the job. Virtually any sort of tradesman is booked out months in advance for houses under construction. Small jobs like this aren't even worth their time.
Along those lines, a few years before the pandemic, we wanted to do a major remodel on our vacation home here in Park City, modifying the floorplan and adding square footage - probably about $350,000 in total. We experienced the same phenomenon you describe - we couldn't get general contractors to give us the time of day. More than one told us $350K remodel was just too small for them to get excited about. Eventually, we gave up and just bought another house, spending $2 million more to get what we wanted instead of remodeling.
Along those lines, a few years before the pandemic, we wanted to do a major remodel on our vacation home here in Park City, modifying the floorplan and adding square footage - probably about $350,000 in total. We experienced the same phenomenon you describe - we couldn't get general contractors to give us the time of day. More than one told us $350K remodel was just too small for them to get excited about. Eventually, we gave up and just bought another house, spending $2 million more to get what we wanted instead of remodeling.
When I remodeled two and a half bathrooms and a minor on the kitchen in 2012 my tile contractors (the biggest piece) told me they preferred not working for the rich in Lake Oswego because they did not value their labor properly and wanted them to work for close to nothing and were very difficult to work for. They preferred working for the middle class who appreciated their labor (in other words easier to work for and pay better because they understand working for a living). So glad I had it done when everything was on sale. I got commercial grade residential contractors (because they had all come off big jobs) and discounted higher end products. I doubt I could even afford to do it now as it would be 2-3 times more expensive (and quite possibly lower quality). I was not even planning to do as much as I did, but, I had such a good team I just kept going (since they were there)...
Not saying that has anything to do with it. I just thought it was kind of a fascinating and unexpected comment. Those guys were in my house so long I started thinking of them as family.
2008 was funny money. Liar loans, NINJA loans, 120% loan to value mortgages, adjustable rate loans that provided huge buying power up front but were time bombs that blew up after adjusting.
This time around there is a lot more real money involved. Treasury printed $9 trillion dollars. They even put $2 trillion of that as cash directly in the hands of buyers.
ZIRP (zero interest rate policy) leveraged buying power. People who couldn't afford "expensive" homes suddenly could because they could service the 30-year mortgage at rock bottom rates. That leverage caused a lot of overpaying for homes, since the monthly payment was still lower than for cheaper homes at higher rates.
The exact opposite is happening now due to relatively high interest rates.
Inflation has raised the cost of new home construction in every way - land prices, labor prices, building materials. What was the inflation rate in 2002-2008?
The supply chain crisis had a huge impact on new home prices as well. It may be temporary but it could have some long term impacts. If suppliers went out of business, the remaining suppliers can charge more for their products if demand is steady.
This time around is nothing at all like 2008.
2008 was funny money and gimmicks. Hence the implosion. Today is a flood of real money printed by Treasury as well as ZIRP low interest rates.
2008 was funny money. Liar loans, NINJA loans, 120% loan to value mortgages, adjustable rate loans that provided huge buying power up front but were time bombs that blew up after adjusting.
This time around there is a lot more real money involved. Treasury printed $9 trillion dollars. They even put $2 trillion of that as cash directly in the hands of buyers.
ZIRP (zero interest rate policy) leveraged buying power. People who couldn't afford "expensive" homes suddenly could because they could service the 30-year mortgage at rock bottom rates. That leverage caused a lot of overpaying for homes, since the monthly payment was still lower than for cheaper homes at higher rates.
The exact opposite is happening now due to relatively high interest rates.
Inflation has raised the cost of new home construction in every way - land prices, labor prices, building materials. What was the inflation rate in 2002-2008?
The supply chain crisis had a huge impact on new home prices as well. It may be temporary but it could have some long term impacts. If suppliers went out of business, the remaining suppliers can charge more for their products if demand is steady.
This time around is nothing at all like 2008.
2008 was funny money and gimmicks. Hence the implosion. Today is a flood of real money printed by Treasury as well as ZIRP low interest rates.
I split time between northeast TN and western NC. I live in northeast TN, my girlfriend lives in western NC, and I work for a western NC county government.
We have been looking to get a plumbing estimate for underslab work in NC for months now. It's almost impossible to even get a response, much less someone to come out and estimate the job. Virtually any sort of tradesman is booked out months in advance for houses under construction. Small jobs like this aren't even worth their time.
We finally did get someone to come out, but they can't commit to even a ballpark timeframe.
Real estate has gone through the roof in both places - a little more so in NC than TN, but TN is quickly catching up. Wages in TN have always been in the toilet. Today, sure, some of those low end jobs have had big pay raises, but they can't afford the housing anyway.
We don’t live too far from you near Hendersonville and havnt had this experience at all. Have experienced the opposite - plumbers, HVAC, electricians, etc., typically come within a few days of being called..
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