Austin Market has truly gone to **** (lender, to buy, inspection)

[Angelfan760]

Originally Posted by austin-steve

You discount what I say by calling me a "Realtor" (I actually don't like most Realtors, save for the exceptionally outstanding ones I know, most are not good), then you go on to write what can only be called a bunch of ... uh ... "opinion". Pure rubbish. Cite your sources or admit that you're just sharing your "Opinion" and have no actual data to back it.

Yeah, I'm a real estate Broker (semi-Retired) but also a longterm investor in the Austin market. I've been here since 1985. I've seen the ups and downs, which we call "cycles". I've seen "irrational exuberance" and I know what it looks like. I have a data-based approach to my thinking and observations. I'm not "salesy" or trying to puff the market.

You might want to go back to the forum threads from 2008-2011 and read what the "chicken little" posters like you were saying about the Austin market back then, and what I was saying, and see what happened, and how stupid all of those prognostications about a crash look in retrospect. Lots of arm chair quarterbacking back then too. Meanwhile investors were scooping up homes languishing on the market that have far exceeded the expected appreciation.

I maintain that anyone who needs a house right now, and is ready, willing and able to buy one, will not benefit from "waiting" for "prices to drop". It ain't gonna happen. It is a structural impossibility from a production standpoint as well as many other measures.

Am I happy about the boom? No, not really, even though I am being enriched because I own properties (not selling any of them, keeping long term as they will continue to go up). I feel bad for my daughters, my friend's kids, other first time young buyers, as well as mid-career move-up families who are now priced out.

My "want" is that a balanced market exist where a median income earner can purchase a median value home. There are many reasons that no longer exists, but the Affordability train has left the station in Austin and is not coming back.

Anyhow, you go ahead and believe what you want. Go ahead and tell me what I'm getting wrong.

Well at least we can agree on the majority of realtors! I always say the good ones 1% do 99% of the business. I base my reasoning on:
1)interest rates going up https://economictimes.indiatimes.com...w/81755512.cms
2) Investment bankers (who have far more intel than us are cutting valuations on lender IPO's https://www.reuters.com/article/us-u...-idUSKBN2AM17K
3) We just had the highest unemployment since the great depression at 15%. https://fred.stlouisfed.org/series/UNRATE. IMO the economy has been propped up but government spending and will normalize in time.

There are plenty more,reasons but you still failed to address the biggest red flag, you have buyers waving inspections, buying up if appraisals are not met, and millions on forebearance.

[riaelise]

These inflated prices directly correlate to the increasing borrowing amounts, lower interest rates, and lack of inventory.

One or more of those things changing can be a game changer.

One problem is that many people are staying put in their homes unless they have to sell. There is no incentive to sell in today's market if you also expect to buy in the same city. I'm glad that we did the 'move up' thing six years ago.

[cheeva]

Originally Posted by riaelise

These inflated prices directly correlate to the increasing borrowing amounts, lower interest rates, and lack of inventory.

One or more of those things changing can be a game changer.

One problem is that many people are staying put in their homes unless they have to sell. There is no incentive to sell in today's market if you also expect to buy in the same city. I'm glad that we did the 'move up' thing six years ago.

Increased the money supply (4 Trillion dollars)
+
Reduced production (COVID shutdowns)

= Inflation


Add the morbid fact that we have 540,000 less people to house in the US, and we're still seeing housing and commodity inflation.

That $4T replaced a demographic (demand) hole caused by 540,000 deaths, and then some.

[Need4Camaro]

Originally Posted by riaelise

These inflated prices directly correlate to the increasing borrowing amounts, lower interest rates, and lack of inventory.

One or more of those things changing can be a game changer.

One problem is that many people are staying put in their homes unless they have to sell. There is no incentive to sell in today's market if you also expect to buy in the same city. I'm glad that we did the 'move up' thing six years ago.

I think most of these buyers are not using a lender which is why they are able to compete with inflated prices as I imagine that would be much tougher to do with a bank, especially with waived appraisals. I’m not sure that interest rates will impact them. I think most people who are going to finance are staying put right now, that or being priced out by the influx of cash buyers.

[Angelfan760]

Originally Posted by Need4Camaro

I think most of these buyers are not using a lender which is why they are able to compete with inflated prices as I imagine that would be much tougher to do with a bank, especially with waived appraisals. I’m not sure that interest rates will impact them. I think most people who are going to finance are staying put right now, that or being priced out by the influx of cash buyers.

I would not expect most to be paying cash, its too cheap to borrow. They are most likely paying the difference in cash on the appraisal and then putting the standard 20% down...

[ashbeeigh]

If there's cash involved in anyway it's going to drive up the price and the offers that are being put in, pushing out the regular buyers.

[austinnerd]

Originally Posted by Angelfan760

I would not expect most to be paying cash, its too cheap to borrow. They are most likely paying the difference in cash on the appraisal and then putting the standard 20% down...

Perhaps "most" might be overstating, but there is no doubt that a large number of folks are presenting "cash" offers to buyers vs those who are borrowing and waving appraisals and those cash buyers are often times have the simple advantage of higher offers.

[10scoachrick]

Originally Posted by riaelise

. I'm glad that we did the 'move up' thing six years ago.

We did the "move down" thing seven years ago and would like to do it again. It's even harder trying to "move down" than to move up right now!!

[BobPhipps]

Originally Posted by Need4Camaro

I think most of these buyers are not using a lender which is why they are able to compete with inflated prices as I imagine that would be much tougher to do with a bank, especially with waived appraisals. I’m not sure that interest rates will impact them. I think most people who are going to finance are staying put right now, that or being priced out by the influx of cash buyers.

If these houses are either not being appraised or selling for significantly over appraised value, then I agree with you Camaro. In my old neck of the woods, houses used to easily go for $100k over asking fairly consistently (and the listed prices were typically right about the appraised value). It was a terrible situation for anyone that had a pre-approval on a loan. The banks refused to lend above the appraised amount, so that pre-approved buyer would need to come up with that extra $100k. It made it extremely difficult for anyone that didn't have cash to compete in the market. I literally saw families looking for homes for over a year. And we always knew when a home was up for sale because the neighborhood look like Grand Central Station. There were cars everywhere and no street parking whatsoever. It was not a good situation even for a credit worthy buyer unless they had a reserve of cash.

[Need4Camaro]

Originally Posted by BobPhipps

If these houses are either not being appraised or selling for significantly over appraised value, then I agree with you Camaro. In my old neck of the woods, houses used to easily go for $100k over asking fairly consistently (and the listed prices were typically right about the appraised value). It was a terrible situation for anyone that had a pre-approval on a loan. The banks refused to lend above the appraised amount, so that pre-approved buyer would need to come up with that extra $100k. It made it extremely difficult for anyone that didn't have cash to compete in the market. I literally saw families looking for homes for over a year. And we always knew when a home was up for sale because the neighborhood look like Grand Central Station. There were cars everywhere and no street parking whatsoever. It was not a good situation even for a credit worthy buyer unless they had a reserve of cash.

Basically this, and this goes for everywhere. I think there are two classes of buyers that are at polar ends right now.

Cash buyers selling their more expensive homes in cities undergoing more repercussions of the Pandemic such as NYC, SF, LA, BOS, CHI, ect ... and using the proceeds to purchase in southern more covid laxed metros like Miami, Atlanta, Dallas, Houston, Phoenix, Austin... because the value of the home they are selling equal to or worth more than the home they are relocating to, they have no problems with bidding wars, price influxes, ect. They aren’t taking a loss. They may not profit as much for selling but overall they still gain in the end.

Then there are those who are using a lender. They are biting the bullet from this. Many of them are probably choosing not to sell due to impossibility of upward mobility and uncertainty of the job market. That plus half the country is now seen less desirable from a pandemic perspective so that limits relocation options too... This both limits inventory (locally due to people choosing not to move) and also limits upward mobility. I believe this is why interest rates are remaining historic low despite the record real estate market, I believe it’s because many of them are not going through the bank... thus interest rates are non-impacted.