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In January, we decided it was time to build. The price of a new house pretty much knocked us over. Of course Lumber and Building Materials was a big part of it. So, we decided maybe let's just buy another exiting home instead. Only to find out those prices were out of site as well. I did some research locally and saw where some houses were going for $100,000 more than just the year before. Other houses actually doubled in price within the last few years.
My question is, how is everyone paying for these ridiculous prices? With the pandemic out there, many were out of work and struggling. Sure we got some stimulus money, but that won't even put much of a dent in it. I know the interest rates are super low, but are banks letting people over extend themselves again?
How many are move up buyers? We were move up buyers two years ago. Of course then you still have the entry level homes. So the question is who is buying the entry level homes and how are they affording them?
I think family assistance is becoming a lot more common now too. Especially in the expensive areas where Mom and Dad who bought their house 20+ years ago have 96 gazillion dollars in equity.
In January, we decided it was time to build. The price of a new house pretty much knocked us over. Of course Lumber and Building Materials was a big part of it. So, we decided maybe let's just buy another exiting home instead. Only to find out those prices were out of site as well. I did some research locally and saw where some houses were going for $100,000 more than just the year before. Other houses actually doubled in price within the last few years.
My question is, how is everyone paying for these ridiculous prices? With the pandemic out there, many were out of work and struggling. Sure we got some stimulus money, but that won't even put much of a dent in it. I know the interest rates are super low, but are banks letting people over extend themselves again?
Comments?
People are selling their old home for way more, and using that to buy a new one.
Mortgage forbearance and eviction moratoriums and the need for single family have further limited supply of homes...so economics 101 right? Supply/demand up until a certain price point and that varies based on location.
People are selling their old home for way more, and using that to buy a new one.
If every would-be buyer were also a seller, then demand shouldn't be exceeding supply. It seems like people who don't own houses now must be trying to buy them, or else people who do own houses are keeping them and trying to buy additional houses as second homes or investment/rental properties.
It's simple. This is the release of pent up demand combined with a temporary reduction in supply, due to COVID-19. It is not a bubble, but the surge is driving up material costs. When materials demand moderates, so will prices.
People are selling their old home for way more, and using that to buy a new one.
I have an existing home. Sure we can get more for it but to move up, like we are trying to do, still costs more than it used to. Houses are going for way more than they should be. Now if you are downsizing, that's a different story and now is the time to act on it, but for the most part, people are trying to move up. But other than help from family members as Bill has mentioned, where is the money coming from?
So far no one has addressed the banks. Are they letting people over extend themselves again?
I've heard stories of houses not appraising for enough, and borrowers wiping out their savings in order to make up the difference. So the banks are paying attention, I'm just not sure how much, or if these were just a few cases.
One house I know of sold for $125k more than it was bought for 9 months ago....
My other thought is panic buying. Something that I never "bought" into. Wondering how much of panic is driving up prices?
By the way, I sure feel for first time buyers. They are the ones really hurting. And in the meantime, their rents are going up.
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