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Old 04-22-2017, 07:23 AM
 
Location: UNMC Area
749 posts, read 434,542 times
Reputation: 993

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Quote:
Originally Posted by Piney Creek View Post
The recent thread on low inventory brought back memories of 2005-2006. Back then it was more about rising prices rather than low inventory, but the effect was the same. A few people I knew then got caught up in "must buy now while we still can" fever. Then they wished they had waited a year, because prices went back down.

Will the same be true this year? If people wait for a year will inventory return to normal levels (and the pickings be better)?

Or is this a different situation, since low inventory is mostly due to not having much new construction in recent years, plus Millennials starting to buy en masse as well as Boomers buying retirement properties (both trends that will only grow stronger over time)?

What do the rest of you think?
It is never a good idea to buy during a Sellers' Market.

There really isn't a whole lot else to say about it.
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Old 04-22-2017, 07:54 AM
 
18,392 posts, read 20,145,045 times
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Quote:
Originally Posted by keraT View Post
Where is all this demand coming from? Do we really have that many more people in USA than we had say 10 years ago? I though if anything we lost population, especially middle USA lost population to coastal high cost of living area. So why is there less existing house


In my mind new home owner (millennial) buy a home that someone else once lived in, most likely baby boomer. That baby boomer then buys retirement condo somewhere south. so the only place I expected to have shortage is in retirement destination. But it seems like new home owners are finding it hard to find house.
Quote:
Originally Posted by keraT View Post
Where are these people moving from? and is there surplus of home in the state they moved from. I understand short-age in "hot city" but it seems like entire country is in shortage of home. Was there lot of babies that were born 30 years ago (more than the usual 2.1 kid per couple) or has there been lot of immigrants in last decade
I don't think you understand. The housing crash was almost 10 years ago. All those 15-20 year olds are now 25-30 year old grown up and have jobs maybe families. Older people aren't selling and retiring later. Theire also not dying as fast and living longer. And the biggest factor is that there was absolutely no building of new housing for at least 5 years. It's just now starting to ramp up. And there aren't enough experienced construction workers anymore as a lot of people left the industry and never went back.
Add in that huge numbers of houses were bought by investors and hedge funds to use as rentals to get revenue and those houses are off the market you have a housing crunch.

Even in your example of millennial buying and retiree leaving and buying where a older retiree died. If the replacement was 1-1 no big deal. But it's not. Because there are 5-6 millennials buying and 2-3 retirees buying.

In Smallville Iowa you may have cheap housing. But Smallville CANT support thousands of people moving there. The infrastructure just isn't there. Neither are the jobs to support that infrastructure.

The demand is huge for housing. We have some rentals and when one goes up available I get inundated with calls.
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Old 04-22-2017, 08:01 AM
 
Location: UNMC Area
749 posts, read 434,542 times
Reputation: 993
Quote:
Originally Posted by Electrician4you View Post
I don't think you understand. The housing crash was almost 10 years ago. All those 15-20 year olds are now 25-30 year old grown up and have jobs maybe families. Older people aren't selling and retiring later. Theire also not dying as fast and living longer. And the biggest factor is that there was absolutely no building of new housing for at least 5 years. It's just now starting to ramp up. And there aren't enough experienced construction workers anymore as a lot of people left the industry and never went back.
Add in that huge numbers of houses were bought by investors and hedge funds to use as rentals to get revenue and those houses are off the market you have a housing crunch.

In Smallville Iowa you may have cheap housing. But Smallville CANT support thousands of people moving there. The infrastructure just isn't there. Neither are the jobs to support that infrastructure.

The demand is huge for housing. We have some rentals and when one goes up available I get inundated with calls.
I assume that you're referring to a specific location, because there have been (literally) tens of thousands of new houses built in Omaha in the past 10 years. To the point that I've been dumbfounded, wondering who in the world is buying them. There have also been thousands of apartments/condos/townhouses built in midtown and downtown during the past 10 years. Honestly, I don't know where all the people are coming from.
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Old 04-23-2017, 03:30 PM
 
Location: Columbia, SC
9,083 posts, read 18,079,428 times
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Quote:
Originally Posted by Volvo Driver View Post
It is never a good idea to buy during a Sellers' Market.

There really isn't a whole lot else to say about it.
It's rarely good to speak in absolutes. I've bought 3 homes in sellers markets. 2 of them turned out fine, still own them as rentals. 3rd one did cost me money but that was because I had to sell it due to a divorce and just didn't own it long enough.
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Old 04-23-2017, 03:50 PM
 
Location: El Pueblo de Nuestra Señora la Reina de los Ángeles del Río Porciúncula
14,518 posts, read 15,302,203 times
Reputation: 10366
But what if it appears that it's going to be a long time seller's market? And interest rates likely headed up? You could be shooting yourself in the foot if you defer buying.

Y'all know my crystal ball is no damned better than anybody else's but my expectation is that we are in a long term period of increasing home values (but not anywhere near causing a bubble) and also a long term rise in interest rates. But nobody will know until the future becomes the now.

I'm an investor and currently selling some houses and keeping some houses. I may sell all within the next few years but more because I don't like being a landlord, not because of any perceived market instability.

I just don't think it's going to turn out well for those who wait and think by waiting they will get a better deal.

I would be cautionary only if it appears the market is headed towards a bubble. I hope we've learned a lot since the last one, but to be honest it makes me VERY NERVOUS at how little it costs for new owners to get into the market.

In my opinion we have a much better chance of avoiding bubbles if all buyers have skin in the game. I put 20% down on my first house. I think it's quite reasonable to expect at least 10% down. I just don't believe in handing out houses like candy on Halloween. This 3% stuff really bothers me, and not even sure if you can't get in for less. That's like $7,500 skin in a $250K house! Considering what it would cost to sell, you are in effect underwater the first day you bought the house!

We have to quit thinking of owning a house as a right and start treating it as a privilege saved for only those who have managed their finances well enough to cough up 10% of the purchase price. IMO that would give a lot of stability to the market, and a lot of insurance against having a future bubble.

Last edited by Lovehound; 04-23-2017 at 04:19 PM.. Reason: spelling error
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Old 04-23-2017, 04:22 PM
 
306 posts, read 472,413 times
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Some of the "buy now or be shut out of the market, this is not a bubble" sentiment really really starts to sound just like the lead in to the last crash.
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Old 04-23-2017, 04:25 PM
 
Location: Salem, OR
14,002 posts, read 32,908,117 times
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Quote:
Originally Posted by Giesela View Post


I've always known that my real estate timing is always exactly the worst. Built in the bubble, sold at a loss, lived in an apt now for 9 years and need to buy, no inventory, prices are like what? and I'll want to down size in 10 which according to your prediction will be when a reset happens.

Yea, do the exact opposite of what I'm doing and you'll be fine!
The mid-2020's prediction is based on the idea that the boomers will be starting to sell property, as they will be heading towards 80, at that point so inventory will really shift. I know in my area we have a lot of snowbirds, so we have boomers with two homes. If they choose to sell both, and head toward retirement centers like Bonaventure's, then would be a game changer for inventory. I can see a glut of larger homes come on the market and have trouble selling. I don't see one level ranches having issues though. I know here, builders are shifting toward larger (2300-2500 sw feet) one story homes for the retiring boomer population.

A lot depends on what the demographics are like in your area, is it an area attracting people, etc. Not all areas are impacted equally during market shifts. Even now, some parts of the country have buyer markets, and some don't. Every market isn't a seller's market.

Also, if you look at the math it might not be as scary as it seems if there is a small correction soon.

So if you buy a $250,000 home with 5% down at a 4.25% 30 year loan your loan amount is $237,500 and your payment is $1168 a month. Now in 10 years (April 2027) you go to sell your home so your loan payoff amount is $188,178 but the market went down and then was flat (for easy calculations) so the home is only worth $230,000. In your mind you are taking a loss on the house. That is $41,822 in equity.

So if the market shifted downward in a year because interest rates went up, so that $250,000 home is now a $230,000 home but the interest rate is 1% higher at 5.25%, then your loan amount is $218,500 your payment is $1207 a month. You sell at the same time (April 2027) and your loan payoff is $183,592 so your equity is $46,408.

It seems like there would be a $4586 gain in the second scenario except that your mortgage payment was higher for 9 years so if you add in the savings you would have had from the lower payment over 9 years of $4212, you can see that even though it seems like the second buyer got a better "deal" because they bought at a lower price, they really only gained $374 over the other scenario.

My point being, that the low-interest rates we have now make a huge difference. Price is important, but price plus interest rate is really, really important. If interest rates go up, prices may drop as a result. It doesn't mean bad things for you in the long run. Since you want to hold the house for 10 years just look at the demographics for your area, why are people moving there, etc. It might not be as scary as you think.

Last edited by Silverfall; 04-23-2017 at 04:54 PM..
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Old 04-23-2017, 07:04 PM
 
Location: El Pueblo de Nuestra Señora la Reina de los Ángeles del Río Porciúncula
14,518 posts, read 15,302,203 times
Reputation: 10366
Quote:
Originally Posted by Silverfall View Post
My point being, that the low-interest rates we have now make a huge difference. Price is important, but price plus interest rate is really, really important. If interest rates go up, prices may drop as a result. It doesn't mean bad things for you in the long run. Since you want to hold the house for 10 years just look at the demographics for your area, why are people moving there, etc. It might not be as scary as you think.
Damn! That's a really fine post dude! (or dudette!)

Perhaps I'm more intuitive to your analytic, but I just have a good feeling about the market. I have expectations about the economy (good) and interest rates (going higher) and the only thing that bothers me has been bothering me a long time: it's still to easy to buy a house with little or no skin in the game.

I'm taking the recent stock market excellent gains as a leading index of better times to come.

My market strategy is more driven by my desire to get out of the rental business so I'm selling my properties that have shown the best value increase over the short term, and holding my less appreciated properties in the event that the market accelerates; I can take my gains later if the market continues to improve. I get the advantage of having it both ways. If the market melts down I already took my profits. If the market accelerates I still got a few dogs in the fight.
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Old 04-23-2017, 07:09 PM
 
2,381 posts, read 1,213,307 times
Reputation: 5127
If you need a house now, buy it now.

If you can wait and see, wait and see.

Simple.
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Old 04-23-2017, 08:16 PM
 
Location: El Pueblo de Nuestra Señora la Reina de los Ángeles del Río Porciúncula
14,518 posts, read 15,302,203 times
Reputation: 10366
Quote:
Originally Posted by emotiioo View Post
If you need a house now, buy it now.

If you can wait and see, wait and see.

Simple.
I too am a proponent of what you say. I think people obsess too much about "when should I buy? " or "when should I sell?" They are micromanaging.

The only reason for not buying when you want a house that I see as valid is concern that there may be another bubble. But just how many bubbles have there been? IDK... Did that one bubble (one?) poison the market forever?

No. It poisoned some buyers forever. Will those people ever buy? Maybe, but they'll be buying late into a rising market. They will pay after the train has left the station, and pay high for it.

I think we need to establish more trust in the housing market, more faith that a stable market provides.

Despite my lack of faith in government, this is where we really need government, to establish financial stability. I'm really annoyed (as I said above) that in their urge to have a hot housing market they are creating an environment where people can't lose--at worst they just walk away--and with the lack of stability we are open to having another bubble.

We need to gradually raise the bar on allowing underfunded buyers to get into a house with little or no skin in the game. It is only skin in the game that motivates buyers, sellers and homeowners to act responsibly. And acting responsibly will create the stable market we all want.
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